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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1998.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Transition Period From to
Commission file number 0-21504
QUAD SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 23-2180139
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2405 MARYLAND ROAD, WILLOW GROVE, PA 19090
(Address of principal executive offices)
(215) 657-6202
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
At August 10, 1998, 4,384,798 of the registrant's Common Stock $.03 par value
were outstanding.
<PAGE>
QUAD SYSTEMS CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets at June 30, 1998 (Unaudited)
and September 30, 1997...........................................3
Condensed Consolidated Statements of Operations (Unaudited)
for the three and nine months ended June 30, 1998 and 1997.......4
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the three and nine months ended June 30, 1998 and 1997.......5
Notes to Condensed Consolidated Financial Statements.....................6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................8
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K....................................11
Signature....................................................................12
<PAGE>
<TABLE>
<CAPTION>
QUAD SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts)
ASSETS
June 30, September 30,
1998 1997
-------- --------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................. $ 1,755 $ 1,981
Accounts receivable, net .............................................. 19,055 20,234
Inventory ............................................................. 21,148 17,097
Deferred income taxes ................................................. 3,130 2,593
Other ................................................................. 1,172 983
Income taxes receivable ............................................... 643 --
-------- --------
Total current assets ........................................ 46,903 42,888
Equipment and leasehold improvements
at cost, less accumulated depreciation of $4,860
at June 30, 1998 and $3,937 at September 30, 1997 ..................... 3,626 3,205
Deferred income taxes ....................................................... 445 699
Goodwill, net ............................................................... 2,637 2,831
Other assets ................................................................ 564 414
-------- --------
$ 54,175 $ 50,037
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit ........................................................ $ 8,200 $ 4,920
Accounts payable ...................................................... 7,330 3,908
Accrued expenses ...................................................... 5,660 5,526
Customer deposits ..................................................... 477 696
Current portion of long-term debt ..................................... 634 620
Deferred service revenue .............................................. 1,290 1,035
Income taxes payable .................................................. -- 229
-------- --------
Total current liabilities ................................... 23,591 16,934
Long-term debt, less current portion ........................................ 1,920 2,325
Stockholders' equity:
Preferred Stock, par value $.01 per share; authorized shares:
1,000,000; no shares issued at June 30, 1998 and September 30, 1997 -- --
Common Stock, par value $.03 per share; authorized shares:
15,000,000; shares issued: 4,398,706 at June 30, 1998
and 4,337,467 at September 30, 1997 ............................... 132 130
Additional paid-in-capital ............................................ 24,609 24,345
Retained earnings ..................................................... 3,851 6,445
Foreign currency translation .......................................... 248 34
Less treasury stock, at cost, 13,908 shares at June 30, 1998
and September 30, 1997 .......................................... (176) (176)
-------- --------
Total stockholders' equity ................................. 28,664 30,778
-------- --------
$ 54,175 $ 50,037
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
QUAD SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------------- --------------------------
June 30, June 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales .................................... $ 17,606 $ 16,975 $ 59,164 $ 60,652
Cost of products sold ........................ 12,617 10,213 40,260 37,985
----------- ----------- ----------- -----------
Gross profit ....................... 4,989 6,762 18,904 22,667
Operating expenses:
Engineering, research and
development ........................ 1,830 1,651 5,572 5,117
Selling and marketing ................... 3,614 3,383 11,159 10,502
Administrative and general .............. 1,292 1,420 5,260 4,448
----------- ----------- ----------- -----------
6,736 6,454 21,991 20,067
----------- ----------- ----------- -----------
Income (loss) from operations ...... (1,747) 308 (3,087) 2,600
Interest expense, net ........................ 159 113 491 233
----------- ----------- ----------- -----------
Income (loss) before income taxes ............ (1,906) 195 (3,578) 2,367
Income tax expense (benefit) ................. (511) 68 (984) 828
----------- ----------- ----------- -----------
Net income (loss) ............................ $ (1,395) $ 127 $ (2,594) $ 1,539
=========== =========== =========== ===========
Net income (loss) per share:
Basic ................................... $ (0.32) $ 0.03 $ (0.60) $ 0.36
Diluted ................................. $ (0.32) $ 0.03 $ (0.60) $ 0.34
Weighted average number of shares outstanding:
Basic ................................... 4,364,706 4,299,348 4,357,856 4,278,524
Diluted ................................. 4,364,706 4,462,393 4,357,856 4,478,404
</TABLE>
<PAGE>
QUAD SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
------------------
June 30,
1998 1997
------- -------
Operating Activities
Net income (loss) ..................................... $(2,594) $ 1,539
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization ................... 1,042 1,292
Provision for losses on accounts receivable ..... 171 23
Deferred income tax benefit ..................... (283) (16)
Stock option compensation ....................... -- 5
Changes in operating assets and liabilities, net:
Accounts receivable ........................ 1,008 (3,028)
Inventory .................................. (4,051) (4,869)
Other assets ............................... (221) 38
Income taxes receivable ..................... (643) --
Accounts payable ........................... 3,422 (132)
Accrued expenses ........................... 134 (505)
Customer deposits .......................... (219) (1,027)
Deferred service revenue ................... 255 419
Income taxes payable ....................... (229) 70
------- -------
Net cash used in operating activities ................. (2,208) (6,191)
Investing Activities
Purchases of equipment and leasehold improvements ..... (1,093) (1,643)
------- -------
Net cash used in investing activities ................. (1,093) (1,643)
Financing Activities
Proceeds from line of credit .......................... 3,280 5,925
Common Stock issued under employee benefit plans ...... 266 518
Procceeds from term loan .............................. -- 3,100
Principal payments on long-term debt .................. (471) (2,450)
------- -------
Net cash provided by financing activities ............. 3,075 7,093
------- -------
Net decrease in cash and cash equivalents ............. (226) (741)
Cash and cash equivalents at beginning of period ...... 1,981 2,636
------- -------
Cash and cash equivalents at end of period ............ $ 1,755 $ 1,895
======= =======
<PAGE>
QUAD SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 Basis of Presentation
The accompanying condensed financial statements present the consolidated
financial position, results of operations and cash flows of Quad Systems
Corporation and its wholly-owned subsidiaries (the "Company") as of the dates
and for the periods indicated. All material intercompany accounts and
transactions have been eliminated in consolidation.
For ease of presentation, the Company has indicated its quarterly financial
reporting periods as ending on the last day of December, March, June and
September, whereas, in fact, the Company reports on a 52-53 week fiscal year
ending on the last Sunday in September, with quarterly period ends that may be
different than the above-indicated reporting dates.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine months ended June 30,
1998 are not necessarily indicative of the results that may be expected for the
fiscal year ending September 30, 1998.
It is suggested that the Company's Annual Report on Form 10-K containing
Management's Discussion and Analysis of Financial Condition and Results of
Operations, the financial statements for the fiscal year ended September 30,
1997, together with notes thereto, be read in conjunction with this document.
Note 2 Inventory
The components of inventory consist of the following (in thousands):
June 30, September 30,
1998 1997
------- -------
Raw materials ... $ 9,841 $ 8,478
Work in process . 3,134 2,017
Finished products 8,173 6,602
------- -------
$21,148 $17,097
======= =======
Note 3 Line of Credit
The Company has a revolving line of credit agreement which permits borrowing up
to a maximum of $10,000,000. During the first quarter of fiscal 1998, the
Company had obtained an increase to its existing line of credit, whereby an
additional $2,500,000 was available, expiring on April 30, 1998. During April
1998, the Company obtained an extension, whereby the $2,500,000 available funds
expire on October 31, 1998.
Note 4 Earnings (Loss) Per Share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." Statement 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to fully
diluted earnings per share. All earnings (loss) per share amounts for all
periods have been presented, and where necessary, restated to conform to the
Statement 128 requirements.
<PAGE>
<TABLE>
<CAPTION>
QUAD SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED) (UNAUDITED)
The following table sets forth the computation of basic and diluted earnings
(loss) per share:
Three Months Ended Nine Months Ended
------------------------ ------------------------
June 30, June 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) ..................... $ (1,395) $ 127 $ (2,594) $ 1,539
========= ========== ========= ==========
Denominator:
Denominator for basic earnings (loss)
per share-weighted average shares . 4,364,706 4,299,348 4,357,856 4,278,524
Effect of dilutive securities:
Employee stock options ............ -- 162,367 -- 199,202
Employee stock purchase plan ...... -- 678 -- 678
--------- ---------- --------- ----------
Dilutive potential Common Stock ....... -- 163,045 -- 199,880
Denominator for diluted earnings (loss)
per share-weighted average shares . 4,364,706 4,462,393 4,357,856 4,478,404
========= ========== ========= ==========
Basic earnings (loss) per share ....... $ (0.32) $ 0.03 $ (0.60) $ 0.36
========= ========== ========= ==========
Diluted earnings (loss) per share ..... $ (0.32) $ 0.03 $ (0.60) $ 0.34
========= ========== ========= ==========
</TABLE>
Weighted average options to purchase 745,046 and 817,189 shares of Common Stock
for the three and nine months ended June 30, 1998, respectively, were not
included in the computation of diluted earnings (loss) per share because they
were antidilutive. Weighted average options to purchase 246,864 and 148,891
shares of Common Stock for the three and nine months ended June 30, 1997,
respectively, were not included in the computation of diluted earnings (loss)
per share because they were antidilutive.
Note 5 Supplemental Disclosures to Statements of Cash Flows
The following are supplemental disclosures to the statements of cash flows (in
thousands):
June 30,
1998 1997
------ ------
Schedule of noncash activity:
Equipment acquired under capital lease $ 80 $ --
====== ======
Cash paid during the period for:
Interest ............................. $ 518 $ 299
====== ======
Income taxes ......................... $ 166 $ 952
====== ======
Note 6 License Agreement
In March 1998, the Company reached an agreement with MPM Corporation ("MPM") to
provide the Company with a paid-up, non-exclusive, non-transferable, perpetual
license for inventions covered by certain patents and other intellectual
property held by MPM. These inventions are currently used in certain of the
Company's screen printers. The Company agreed to pay to MPM a one-time license
fee of $1,000,000 for the right to use those inventions. The Company has
recognized the entire amount of this fee in the second quarter of fiscal 1998.
<PAGE>
QUAD SYSTEMS CORPORATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
For ease of presentation, the Company has indicated its quarterly financial
reporting periods as ending on the last day of December, March, June and
September; whereas, in fact, the Company reports on a 52-53 week fiscal year
ending on the last Sunday in September, with quarterly period ends that may be
different than the above-indicated reporting dates. The following table sets
forth certain financial data as a percentage of net sales for the periods
indicated:
Three Months Ended Nine Months Ended
June 30, June 30,
1998 1997 1998 1997
----- ----- ----- -----
Net sales ........................... 100.0% 100.0% 100.0% 100.0%
Gross margin ........................ 28.3 39.8 32.0 37.4
Engineering, research and development 10.4 9.7 9.4 8.4
Selling and marketing ............... 20.5 19.9 18.9 17.3
Administrative and general .......... 7.3 8.4 8.8 7.3
Income (loss) from operations ....... (9.9) 1.8 (5.2) 4.3
Income (loss) before income taxes ... (10.8) 1.1 (6.0) 3.9
Net income (loss) ................... (7.9) 0.7 (4.4) 2.5
Net sales of $17.6 million for the third quarter of fiscal 1998 increased
slightly compared to the third quarter of fiscal 1997, while for the nine months
of fiscal 1998, net sales decreased $1,488,000 or 2.5% compared to the first
nine months of fiscal 1997. The following table sets forth sales of certain
product lines for the periods indicated:
Three Months Ended Nine Months Ended
June 30, June 30,
1998 1997 1998 1997
------- ------- ------- -------
Assemblers ....... $ 9,358 $ 8,930 $34,535 $36,902
Screen printers .. 4,019 3,787 10,430 10,232
Reflow ovens ..... 1,036 961 3,435 3,134
Sales were flat in the third quarter as compared to the same quarter last year
but decreased $4,403,000 or 19.6% compared to the second quarter of fiscal 1998.
Although sales were flat in the third quarter as compared to the same quarter of
last year, the Company reported a net loss in the third quarter of 1998 of $1.4
million, or $0.32 loss per diluted share, compared to net income of $127,000, or
$.03 gain per diluted share, for the same period in the prior year. The net loss
is principally due to severe market downturns in the electronics industry,
resulting in increased price competition and decreased margins.
International sales represented approximately 42.8% and 49.7% of net sales for
the third quarter of fiscal 1998 and 1997, respectively, and 37.5% and 41.8% of
net sales for the first nine months of fiscal 1998 and 1997, respectively. The
decease in international sales is primarily the result of decreased orders in
Asia and in South America. The Asian crisis is resulting in a severe
overcapacity and an oversupply of leftover low-cost component inventory in the
electronics industry during the short term. The industry softness has affected
the Company's domestic sales as well, which were down due to cutbacks in
computers and peripherals, plus uncertainty in other segments. The Company
expects that the slowdown in industry activity will continue for at least the
remainder of calendar 1998.
Gross margin decreased to 28.3% from 39.8% and to 32.0% from 37.4%, compared to
the third quarter and nine months of fiscal 1998 to 1997, respectively. The
decrease in gross margin reflects the severe downturn in the electronics
industry and affected all of the Company's major products. The Company expects
that competitive pricing pressures will continue for some time.
Responding to the industry instability, the Company has plans to enact programs
designed to cut costs in an effort to bring them in line with current levels of
business activity. These programs will include workforce reductions of
approximately 15%, realignment of operating priorities and deferral of selected
operational programs. There can be no assurance, however, that the Company will
be successful in these cost savings efforts or that such efforts will
successfully reduce costs and expenses or reduce costs and expenses to levels
adequate to offset the effects of industry weakness.
<PAGE>
QUAD SYSTEMS CORPORATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Engineering, research and development expenses increased $179,000 or 10.8% and
$455,000 or 8.9% for the third quarter and first nine months of fiscal 1998,
respectively, compared to the same periods of the prior fiscal year. The
increase in the first nine months of fiscal 1998, primarily reflects the
addition of personnel to the engineering, research and development departments
as the Company has increased the research and development efforts associated
with various products such as the APS-1 assembler, the QSA-120DL assembler and
other option features for the "Q" Series. The Company continues to develop
additional features for the APS-1 assembler to expand and increase the
functionality of this product.
Selling and marketing expenses increased $231,000 or 6.8% and $699,000 or 6.7%
for the third quarter and first nine months of fiscal 1998, respectively,
compared to the same periods last year. The increase is mostly a result of
higher overall commission rates.
Administrative and general expenses decreased $128,000 or 9.0% for the third
quarter of fiscal 1998 over the third quarter of the prior year but increased
$770,000 or 17.3% for first nine months of fiscal 1998 when compared to the same
period last year. The increase is mostly due to one-time costs incurred in
fiscal 1998, including $1.0 million to obtain a paid-up license of patented
technology from MPM Corporation (see below for a detailed explanation) and
severance costs of $322,000 related to the resignation of the Company's former
president and other reductions in the workforce. Excluding these costs,
administrative and general expenses decreased approximately $552,000 or 12.4%
for first nine months of fiscal 1998 compared to the same period last year. The
Company believes that operating expenses for the next several quarters will
decrease as the cost-cutting programs noted above are implemented. However,
there can be no assurance that implementing the programs will result in
decreased operating expenses.
Income tax benefit of $511,000 and $984,000 represented an effective tax rate of
26.8% and 27.5% for the third quarter of fiscal 1998 and first nine months of
fiscal 1998, respectively, as compared to an effective tax rate for income tax
expense of 38.0% in the same periods of the prior year. Income tax for fiscal
1998 differs from the amount that would result from applying the Federal
statutory tax rate to the results from operations primarily due to permanent
differences in taxable income versus financial income. The Company expects its
effective tax rate to remain at approximately 27.5% for the remainder of the
fiscal year.
Backlog
As of June 30, 1998, the Company's backlog of orders was $7.3 million, compared
to $11.3 million as of September 30, 1997 and $12.6 million as of June 30, 1997.
Bookings for the third quarter of fiscal 1998 were $14.1 million as compared to
bookings of $19.4 million in the second quarter of fiscal 1998 and $19.7 million
in the fourth quarter of fiscal 1997. The following table sets forth certain
backlog information by product line for the periods indicated (in millions):
June 30,
1998 1997
---- ----
Assemblers $3.5 $7.2
Screen printers 1.3 1.9
Reflow ovens .2 .7
The remainder of backlog consists of other products. It has been the Company's
experience that purchasers of capital equipment have not issued purchase orders
calling for delivery of products over an extended period.
Backlog therefore may not necessarily be indicative of future sales.
<PAGE>
QUAD SYSTEMS CORPORATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Liquidity and Capital Resources
The Company's working capital as of June 30, 1998 was approximately $23.3
million, including cash balances of approximately $1.8 million. At September 30,
1997, the Company had working capital of approximately $26.0 million, including
cash balances of approximately $2.0 million. During the first nine months of
fiscal 1998, net cash used in operations amounted to $2.2 million, principally
due to the net loss of $1.9 million. Purchases of equipment and cash used in
operations was mostly financed by $3.3 million of incremental borrowings under
the Company's revolving line of credit.
The Company has a revolving line of credit agreement which permits borrowings up
to a maximum of $10,000,000 and bears interest at the bank's base rate of
interest or, at the Company's option, the bank's prime rate or LIBOR plus 1.30%,
when the outstanding balance is greater than $500,000. This line of credit is
secured by a pledge by the Company's English holding company, Quad Systems
Holdings Limited, of 65% of the outstanding shares of its two wholly-owned
English operating subsidiaries. The Company pays a fee on the unused portion of
the line of credit. This credit agreement expires in April 2000. This line of
credit also contains various customary operating and reporting covenants and
requires maintenance of certain financial ratios. As of June 30, 1998,
borrowings under this line of credit were $8,200,000.
During the first quarter of fiscal 1998, the Company obtained an increase to its
existing line of credit whereby the bank made available under the terms of the
existing line of credit an additional $2,500,000. This increase, which
originally was to expire on April 30, 1998, was extended to October 31, 1998.
The Company believes that existing cash balances and borrowing capacity will
provide adequate financing for the next year.
License Agreement
In March 1998, the Company reached an agreement with MPM Corporation ("MPM") to
provide the Company with a paid-up, non-exclusive, non-transferable, perpetual
license for inventions covered by certain patents and other intellectual
property held by MPM. These inventions are currently used in certain of the
Company's screen printers. The Company agreed to pay to MPM a one-time license
fee of $1,000,000 for the right to use those inventions. The Company recognized
the entire amount of this fee in the second quarter of fiscal 1998.
Forward Looking Statements
The discussions above regarding the Company's expectations of future sales,
gross margins, operating expenses, scheduling of new product introductions and
expected shipment dates and the outlook for the SMT industry and advanced
packaging markets include certain forward-looking statements on these subjects.
As such, actual results may vary materially from such expectations. Among the
meaningful factors that may affect the realization of such expectations are
variations in the level of order bookings, which can be affected by general
economic conditions, domestic and international and growth rates in the SMT
manufacturing industry and advanced packaging markets and the intensity of
competition, ability to achieve cost reductions in an effort to bring spending
in-line with current levels of business activity, product development delays or
performance problems, difficulties or delays in software functionality and
performance, the timing of future product releases, failure to respond
adequately either to changes in technology or to customer preferences and risks
of nonpayment of accounts receivable.
<PAGE>
QUAD SYSTEMS CORPORATION
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Severance Agreement dated March 30, 1998, as further amended on
April 7, 1998, between the Company and David W. Smith.
10.2 Severance Agreement dated April 6, 1998, between the Company and
Joseph L. Gasper.
10.3 Executive Severance Pay Plan.
10.4 Employment memorandum dated April 27, 1998, between the Company
and Theodore J. Shoneck.
10.5 Employment memorandum dated April 27, 1998, between the Company
and Anthony R Drury.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the period
covered by this report.
<PAGE>
QUAD SYSTEMS CORPORATION
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
QUAD SYSTEMS CORPORATION
Date: August 12, 1998 By: \s\ Anthony R. Drury
------------------------
Anthony R. Drury
Senior Vice President, Finance
and Chief Financial Officer
EXHIBIT 10.1
Quad Systems Corporation
2405 Maryland Road
Willow Grove, PA
19090
March 30, 1998
HAND DELIVER
Mr. David W. Smith
934 Park Avenue
Wycombe, PA 18980-0329
Re: Severance Agreement and General Release
Dear David:
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, 2405
Maryland Road, Willow Grove, PA 19090, Attn: David H. Young.
If you agree with the proposed terms set forth above, please sign this letter
indicating your understanding and agreement.
QUAD SYSTEMS CORPORATION
By: /s/ David Young
David H. Young, Director
AGREED, UNDERSTOOD AND ACCEPTED:
/s/ David W. Smith List provided to Vah Erdekian
David W. Smith Tues morning for consideration
DWS 3-31-98
3-31-98
Date
<PAGE>
Quad Systems Corporation
2405 Maryland Road
Willow Grove, PA
19090
April 7, 1998
HAND DELIVER
Mr. David W. Smith
934 Park Avenue
Wycombe, PA 18980-0329
Re: Amendment to Severance Agreement and General Release
Dear David:
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.
<PAGE>
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 Dominique Badel).
If you agree with the proposed terms set forth above, please sign this letter
indicating your understanding and agreement.
QUAD SYSTEMS CORPORATION
By: /s/David Young
David H. Young, Director
AGREED, UNDERSTOOD AND ACCEPTED:
/s/ David W. Smith
David W. Smith
4/17/98
Date
EXHIBIT 10.2
Quad Systems Corporation
2405 Maryland Road
Willow Grove, PA 19090
March 31, 1998
HAND DELIVER
Mr. Joseph Gasper
2 Candlelight Drive
Edgewater Park, NJ 08010
Re: Severance Agreement and General Release
Dear Joe:
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 31,
1998 without cause. You hereby resign as Senior Vice-President, Operations of
the Company and as any other officer of the Company or any of its subsidiaries
or affiliates.
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 your current base rate through the close of business, Friday, 3
April 1998, in accordance with the Company's normal payroll practices.
(b) Pay you the gross amount of $2,575 per week, less usual withholding, for a
period of thirty (30) 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.
(c) 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(b)
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.)
<PAGE>
Mr. Joseph Gasper
March 31 1998
Page 3
(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 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 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, 2405
Maryland Road, Willow Grove, PA 19090, Attn: David H. Young.
If you agree with the proposed terms set forth above, please sign this letter
indicating your understanding and agreement.
QUAD SYSTEMS CORPORATION
By: /s/David Young
David H. Young, Director
AGREED, UNDERSTOOD AND ACCEPTED:
/s/ Joseph Gasper
- -------------------------
Joseph Gasper
April 6, 1998
- -------------------------
Date
EXHIBIT 10.3
QUAD SYSTEMS CORPORATION
EXECUTIVE SEVERANCE PAY PLAN
Effective January 26, 1996
SECTION 1. PURPOSE
The purpose of the Quad Systems Corporation Executive
Severance Pay Plan is to provide guidelines for severance payments to executives
at the level of Vice President and above who meet the eligibility requirements
described below when they are permanently terminated without cause from their
active employment with Quad Systems Corporation.
SECTION 2. DEFINITIONS
As hereinafter used:
2.1 "Company" means Quad Systems Corporation.
2.2 The "Effective Date" of the Plan is January 26, 1996.
2.3 The "Board of Directors" is the Board of Directors of Quad
Systems Corporation.
2.4 An "Employee" or a "Executive Employee" means a person
who, after the Effective Date, was employed by Quad Systems Corporation on his
Termination Date in an Executive Position, on a full time basis at a stated rate
of compensation expressed in terms of weekly, monthly or annual salary, on a
regular and continuing basis, specifically excluding any persons who: (a) are
employed on less than a full-time basis; (b) were hired for a specific limited
period of time or on a sporadic or intermittent basis for periods of varying
duration;(c) are not actively employed by virtue of being on medical leave,
educational leave, or any other reason; or (d) are not employed in an Executive
Position on their Termination Date.
2.5 A "full Year of Employment" of an Employee means the
Employee's full years of continuous employment up to and including the
Employee's Termination Date.
2.6 "Pay" means the base salary of an eligible Employee at his
or her stated weekly, monthly or annual rate as of the Employee's Termination
Date. "Pay" does not include overtime pay, bonuses of any kind or any other
remuneration. A "Week of Pay" shall be calculated in accordance with the
Company's regular payroll practices and procedures.
2.7 The "Plan" means the Quad Systems Corporation Executive
Severance Pay Plan as set forth herein as amended from time to time.
2.8 "Termination Date" means the date upon which Quad Systems
Corporation terminates the Employee's employment with Quad Systems Corporation.
2.9 The "Benefits Committee" means a committee composed of
Quad Systems Corporation President; Senior Vice President, Finance; and Human
Resources Director. Any two (2) such persons shall constitute a quorum.
2.10 "Severance Pay" is a payment made to an eligible
Executive Employee pursuant to Section 3.1 hereof.
2.11 "Executive Position" means any position at the level of
Vice President or above.
SECTION 3. ELIGIBILITY
3.1 An Executive Employee shall be eligible to receive
Severance Pay if and only if all of the following conditions are met (and he is
not disqualified from eligibility pursuant to Section 3.2) as determined in the
sole discretion of the Benefits Committee under this Plan:
(a) The Employee is an Employee of the Company after
the Effective Date of the Plan;
(b) The employment of the Employee is involuntarily
and permanently terminated by the
Company without cause while the Plan remains in effect and while the Employee is
in an Executive Position, because of (i) a permanent layoff, reduction-in-force,
facility closing, reorganization or consolidation, other similar business
decision or (ii) because of unsatisfactory performance;
(c) The Employee does not receive severance pay from
the Company other than pursuant to this Plan;
(d) The Employee has returned all Company property,
submitted all travel, expense and
other such reports, and has paid to the Company any amounts that are due;
(e) The Company has not determined that the Employee,
either prior or subsequent to
the cessation of employment, has (i) misappropriated or improperly used or
disclosed a confidential or proprietary information of the Company or (ii)
failed to comply with any contractual obligations to the Company; and
(f) The Employee duly executes and provides to the
Company within the time period
specified by the Company a General Release satisfactory to the Company, which
the Employee does not revoke in a timely manner, if a revocation provision is
included in the Company's sole discretion. At a minimum, the General Release
must include language releasing and forever discharging the Company, its past,
present and future officers, directors, attorneys, employees, owners 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 Employee, his or her
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 by the Company; any claims for unpaid or
withheld wages, severance, benefits, commissions, bonuses and/or other
compensation of any kind; any claims for attorneys' fees, costs or expenses; any
claims of 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.
3.2 An Executive Employee may not receive Severance Pay if any
of the following disqualifying events occur as determined in the sole discretion
of the Benefits Committee under this Plan:
(a) The Company is sold or the portion of the
Company's operations at which the
Employee works is sold or otherwise transferred to an entity ("Owner") other
then the Company, and the Employee is offered employment by or transferred to
the new Owner, regardless of the terms and conditions of employment offered by
the new Owner;
(b) The Employee is terminated for cause, as
determined in the sole discretion of the
Company, including but not limited to for absenteeism or tardiness,
insubordination, dishonesty, theft, misappropriation or misuse of Company
property, disclosure of confidential or proprietary information to other
persons, willful misconduct, harassment, or the failure to comply with the
Company's rules, policies or procedures, which currently exist or are hereafter
adopted;
(c) The Employee terminates employment by retirement,
resignation, death or permanent or temporary disability;
(d) The Employee refuses to accept a transfer;
(e) The Company determines that the Employee has not
returned all Company property, submitted all travel, expense and other such
reports or has not paid to the Company any amounts that are due;
(f) The Company determines that the Employee, either
prior to or subsequent to the
cessation of employment, has (i) misappropriated or improperly used or disclosed
confidential or proprietary information of the Company or (ii) failed to comply
with any contractual obligation to the Company; or
(g) The Employee fails to duly execute and to provide
to the Company within the time
specified by the Company a General Release satisfactory to the Company, which
the Employee does not timely revoke, if a revocation period is applicable.
SECTION 4. SEVERANCE BENEFIT AMOUNT
4.1 Except as otherwise provided in this Section 4, the
Severance Pay to be paid to an eligible Employee shall be four (4) Weeks of Pay
for each full year of Employment up to a maximum of twenty-four (24) Weeks of
Pay. The minimum amount of severance pay shall be eight (8) Weeks of Pay.
Notwithstanding the foregoing, all Severance Pay shall cease upon the date the
Employee commences other full-time employment.
4.2 If an eligible Employee applies for and receives
unemployment compensation payments for any period of time during or for which
Severance Pay is being paid, any Severance Pay remaining to be paid shall not be
reduced by the amount of any such unemployment compensation payments.
4.3 If an Employee due to sickness or injury receives
short-term disability payments, worker's compensation or long-term disability
payments after the Employee's Termination Date, the Employee shall not receive
any Severance Pay until the cessation of said payments. Once said payments
cease, the amount of Severance Pay to which the Employee is entitled shall be
reduced by the amount of any such short-term disability, worker's compensation
or long-term disability payments.
4.4 The severance benefit provided for in the Plan is the
maximum benefit that the Company will pay for severance. To the extent that a
Federal, state or local law might require the Company to make a payment to an
Eligible Employee because of that Employee's involuntary termination, the
benefit payable under the Plan shall be correspondingly reduced..
4.5 The Company shall have the right to take such action as it
deems necessary or appropriate to satisfy any requirements under Federal, state
or other laws to withhold or to make deductions from any benefits payable under
the Plan.
SECTION 5. DISTRIBUTION OF BENEFITS
5.1 The Company will pay to each eligible Employee Severance
Pay directly out of the general assets of the Company in installments in
accordance with its normal payroll practices. Such payments shall commence as
soon as practicable following either the Employee's Termination Date and
continue until the benefit due is paid. Notwithstanding the foregoing, the
Company reserves the right to pay any severance benefit payable hereunder in a
single lump sum payment.
5.2 Severance Pay shall be paid to the estate of any eligible
Employee who dies before the entire amount due hereunder is paid.
SECTION 6. PLAN ADMINISTRATION
6.1 The Plan shall be administered by the Benefits Committee,
which shall have complete authority to prescribe, amend and rescind rules and
regulations relating to the Plan. The Benefits Committee may allocate and assign
any of its responsibilities and duties for the operation and administration of
the Plan to such other persons as it determines appropriate.
6.2 The determinations by the Benefits Committee on the
matters referred to such Committee shall be conclusive. The Benefits Committee
shall have full discretionary authority, the maximum discretion allowed by law,
to administer, interpret and apply the terms of this Plan, and determine any and
all questions or disputes hereunder, including but not limited to eligibility
for benefits and the amount of benefits due.
6.3 In the event of a claim by any person including but not
limited to any Employee (the "Claimant") as to whether he is entitled to any
benefit under the Plan, the amount of any distribution or its method of payment,
such Claimant shall present the reason for his or her claim in writing to the
Benefits Committee. The claim must be filed within forty-five (45) days
following the date upon which the Claimant first learns of his claim. All claims
shall be in writing, signed and dated and shall briefly explain the basis for
the claim. The claim shall be mailed to the Benefits Committee by certified mail
at the following address: Quad Systems Corporation, Two Electronic Drive,
Horsham, PA 19044. The Benefits Committee shall, within ninety (90) days after
receipt of such written claim, decide the claim and send written notification to
the Claimant as to its disposition; provided that the Benefits Committee may
elect to extend said period for an additional ninety (90) days if special
circumstances so warrant and the Claimant is so notified in writing prior to the
expiration of the original ninety (90) day period. In the event the claim is
wholly or partially denied, such written notification shall (a) state the
specific reason or reasons for the denial; (b) make specific reference to
pertinent Plan provisions on which the denial is based: (c) provide a
description of any additional material or information necessary for the Claimant
to perfect the claim and an explanation of why such material or information is
necessary; and (d) set forth the procedure by which the Claimant may appeal the
denial of his or her claim. The Claimant may request a review of such denial by
making application in writing to the Benefits Committee within sixty (60) days
after receipt of such denial. Said application must be via certified mail. Such
Claimant (or his or her duly authorized representative) may, upon written
request to the Benefits Committee, review any documents pertinent to his or her
claim, and submit in writing issues and comments in support of his or her claim
or position. Within sixty (60) days after receipt of a written appeal, the
Benefits Committee shall decide the appeal and notify the Claimant of the final
decision; provided that the Benefits Committee may elect to extend said sixty
(60) day period to up to one hundred twenty (120) days after receipt of the
written appeal. The final decision shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the Claimant, and specific references to the pertinent Plan
provisions on which the decision is based.
SECTION 7. PLAN MODIFICATION OR TERMINATION.
7.1 The Plan may be modified, amended or terminated at any
time by the Board of Directors or its designee, with or without notice. Any such
modification, amendment or termination shall be effective at such date as the
Board of Directors or its designee may determine.
7.2 All claims for benefits hereunder, even if raised after
termination of the Plan, shall be determined pursuant to Section 6.3, and when
acting pursuant thereto, the Benefits Committee shall retain the authority
provided in Section 6. Notwithstanding any termination of the Plan, all
Employees who are eligible before the date of termination to receive Severance
Pay pursuant to this Plan shall remain entitled to receive said benefit under
the terms and conditions of this Plan.
SECTION 8. GENERAL PROVISIONS .
8.1 Nothing herein contained shall be deemed to give any
Employee the right to be retained in the employ of the Company or to interfere
with the right of the Company to discharge him or her at any time, with or
without cause.
8.2 If any of the positions on the Benefits Committee becomes
vacant, either the Chairman of the Board or President may appoint such person or
persons as he or she determines, to carry out the responsibilities assigned to
such position under this Plan.
8.3 Except as otherwise provided by law, no right or interest
of any Employee under the Plan shall be assignable or transferable, in whole or
in part, either directly or by operation of law or otherwise, including without
limitation by execution, levy, garnishment, attachment, pledge or in any other
manner, but excluding adjudication of incompetency; no attempted assignment or
transfer thereof shall be effective; and no right or interest of any Employee
under the Plan shall be liable for, or subject to, any obligation or liability
of such Employee, except to the extent specifically provided for herein.
8.4 The Plan is unfunded. All benefits payable under the Plan
shall be paid out of the general assets of the Company.
8.5 The Plan shall be governed by and construed in accordance
with the Employee Retirement Income Security Act of 1974, as amended, and to the
extent not preempted, the laws of the Commonwealth of Pennsylvania.
8.6 The Plan is intended to constitute a "welfare plan" under
the Employee Retirement Income Security Act of 1974, as amended, and any
ambiguities in the Plan shall be construed to effect that intent.
8.7 Whenever applicable the masculine gender, as used in the
Plan, shall include the feminine or neuter.
EXHIBIT 10.4
April 27, 1998
HAND DELIVER
Mr. Theodore J. Shoneck
14 Yarmouth Lane
Downingtown, PA 19335
Re: Matters Relating to Appointment as President
and President-COO
Dear Ted:
Congratulations on your recent appointment by the Board of Directors of Quad
Systems Corporation (the "Company") as the President and President-COO (the
"President-COO") of the Company. As you know, you will continue to hold your
appointment as the President-COO at the pleasure and in the sole discretion of
the Company's Board of Directors. In connection with that appointment, under
those circumstances, you and the Company have agreed as follows:
i. Effective at the open of business on March 31, 1998, for so long as you
are the President-COO, the Company shall:
(i) Pay you the gross amount of $3,269.23 per week ($170,000 annualized for
continuing service as the President-COO) (the "Base Salary"), less usual
withholding. (The Board of Directors, in its sole discretion, from time to time
hereafter may consider increases in the Base Salary.)
(i)In addition to the Base Salary, while you are the President-COO, you
will be eligible to participate in all of the Company's group medical, dental,
401(k), group medical spending program, deferred compensation program and any or
all other group insurance programs or other benefits now or hereafter provided
by the Company on the same basis as for other employees of the Company
(collectively, "Benefits"). Your usual contribution for coverage for the
Benefits will be due from you during this period.
(i)While you are the President-COO, you are an "Executive Employee" as
defined in and subject to the Company's Executive Severance Pay Plan effective
January 26, 1996 attached hereto (the "Pay Plan"), as the same may hereafter be
amended from time to time, and your employment and any "Severance Pay" (as
defined in the Pay Plan) is subject to the Pay Plan; provided, however, that to
the extent the terms of the Pay Plan conflict with terms of this letter, the
terms of this letter shall control over the terms of the Pay Plan.
(i)In addition to the Base Salary, you may be eligible to receive bonuses
(singularly, a "Bonus" and, collectively, "Bonuses"), as determined in the sole
discretion of the Compensation Committee of the Board of Directors. The goals to
be achieved by you as the President-COO to receive Bonuses, as previously
established for you for the Company's fiscal year ending September 1998, shall
remain in effect until and unless the Compensation Committee, no earlier than
the end of June 1998, may in its sole discretion alter such goals and any
related targeted Bonus; however, it is acknowledged that based on current
reasonable expectations and standards, a major goal for the President-COO is to
identify and consummate arrangements for a strategic partner for the Company's
screen printer and/or oven businesses and that it is expected that a significant
goal for the President-COO will be to assume a major role in accomplishing such
transactions and that therefore it is likely that any such Bonus would be
partially dependent on achieving such goals.
(i)In addition to the Base Salary, you are hereby granted, as of April 27,
1998 (the "Grant Date"), options ("Options") to purchase an aggregate of 40,000
shares of the Company's common stock, par value $.03 per share (the "Common
Stock"), which Options have an exercise price equal to the closing price of the
Common Stock on the Nasdaq National Market on the Grant Date, vest in 25%
increments on each of the first four anniversaries of the Grant Date, are
intended to be "incentive stock options" within the meaning of the Internal
Revenue Code of 1986, as amended, and are otherwise subject to the terms and
conditions of the Company's 1993 Stock Incentive Plan, as amended, under which
such Options are granted (the "Option Plan").
(i)In addition to the Base Salary, Options and Bonuses (if any), for so
long as you are the President-COO, you will be entitled to all Company paid
holidays and vacation time, initially with three weeks vacation and, on the
anniversary of your original date of hire as a Company employee, accruing at a
rate of three weeks per year, until the fifth anniversary of your original date
of hire, after which vacation time will accrue at a rate of four weeks per year.
2. (a) If a "Change of Control" of the Company occurs while you are the
President-COO, notwithstanding any provision in the Pay Plan to the contrary,
you shall receive compensation as described below; provided, however, that in
any event of any sale of the Company's screen printer or oven businesses or any
portions thereof or any other transaction involving only the screen printer or
oven business that otherwise would be covered by the definition of "Change of
Control" set forth below, any such event shall not be deemed to constitute a
Change of Control unless such sale is a sale of substantially all of the assets
then held by the Company.
(b) For purposes of this letter, notwithstanding any contrary
definitions in any of the Option Plan, the Pay Plan or the "Conditions" (as
defined in Paragraph 3 below), a "Change of Control" shall be deemed to have
occurred upon the earliest to occur of any of the following events:
<PAGE>
i. The date of consummation of a sale or other disposition of all or
substantially all of the Company's assets, or consummation of any other such
transaction or series of transactions, having similar effect; or
(ii) the latest date on which both the stockholders of the Company (or the
Board of Directors if stockholder action is not required) and the stockholders
of the other constituent corporation (or its board of directors if stockholder
action is not required) have approved a definitive agreement to merge,
reorganize or consolidate the Company with or into such other constituent
corporation and the holders of the voting securities of the Company immediately
prior to such approval will not represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 50% of
the voting power of the surviving entity; or the date on which the stockholders
of the Company (or the Board of Directors if stockholder action is not required)
have approved a definitive plan of complete liquidation or dissolution of the
Company; or
(iii) more than 50% of the Company's Board of Directors who had been
serving on the Company's Board of Directors at the time the Board of Directors
approves any transaction of the kind described in clauses (i) and (ii) of the
definition of "Change of Control" (individually, a "Change of Control
Transaction" and collectively, "Change of Control Transactions") ceases to serve
as members of the Company's Board of Directors within three months after such
approval has occurred.
If any Change of Control occurs, or your employment is terminated at any time
after the date which is thirty (30) calendar days before the date on which the
Company's Board of Directors approves a Change of Control Transaction, then you
shall be entitled to receive from the Company twelve months of Base Salary and
Benefits, with the Base Salary to be paid in full in one lump sum within 30 days
after such Change of Control or termination of employment and with Benefits to
be paid on a monthly basis for twelve months after such Change of Control or
termination of employment, with your usual contribution for coverage for the
Benefits due from you during such twelve month period.
(c) If your employment as President-COO is terminated by the
Company at any time other than after a Change of Control, or after the date
which is thirty (30) calendar days before the date on which the Broad of
Directors approves a Change of Control Transaction due to action by the
Company's Board of Directors for any reason other than "cause" as described in
Section 3.2(b) of the Pay Plan, as amended below, notwithstanding any provision
in the Pay Plan to the contrary, you shall receive 36 Weeks of Pay (including
Benefits); provided, however, that such amount shall be limited to 24 Weeks of
Pay (including Benefits) if at any time during the period in which you are
receiving "Severance Pay" as defined in the Pay Plan, you commence other
full-time employment. For purposes of this letter, in the definition of "cause"
in Section 3.2(b) of the Pay Plan, the words "absenteeism or tardiness,
insubordination" are hereby deleted, and after the words "the failure to comply
with the Company's rules, policies or procedures, which currently exist or are
hereafter adopted," the words "after notice of such failure has been given to
the Employee and the Employee has failed to cure such failure within 15 days of
such notice" are hereby added.
3. When you began employment with the Company, you signed an
agreement entitled "Conditions of Employment" in the form attached hereto (the
"Conditions"). Notwithstanding the provisions of the Conditions, the
non-competition period described in Paragraph 6 of the Conditions shall be
limited to six months after the "Termination Date" as defined in the Pay Plan
and your obligations to refrain from soliciting the Company's employees, as set
forth in Paragraph 7 of the Conditions, shall continue for a period of 18 months
after the Termination Date. In all other respects, the Conditions remain in full
force and effect, unaffected by this letter.
4. This letter, the Pay Plan, the Option Plan and the
Conditions together embody the complete understanding and agreement between the
parties hereto and supersede any and all prior agreements between the parties,
oral or written, express or implied. Nothing contained herein or therein shall
be construed so as to constitute any entitlement by you to be the President-COO,
receive the Base Salary, any Bonus or obtain any other continuation of
employment with the Company for any period of time other than at the continuing
pleasure of the Board of Directors in its sole discretion.
5. This letter 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.
6. If any provision of this letter is deemed unlawful or
unenforceable by a court of competent jurisdiction, the remaining provisions
shall continue in full force and effect.
If you agree that the terms set forth above properly set forth our
understanding, please sign this letter indicating your understanding and
agreement.
QUAD SYSTEMS CORPORATION
By:________________________
Vahram V. Erdekian, Director
and Member of the Compensation
Committee of the Board
AGREED, UNDERSTOOD AND ACCEPTED
AS OF THE DATE SET FORTH ABOVE:
_________________________(SEAL)
Theodore J. Shoneck
<PAGE>
CONDITIONS OF EMPLOYMENT
As an inducement to QUAD SYSTEMS THE CORPORATION (the Corporation") to employ or
to continue to employ the undersigned, Theodore J. Shoneck (the "Employee"), and
in consideration of the employment or continued employment of the Employee by
the Corporation and the compensation and other benefits paid or to be paid by
the Employee, and in recognition of the importance of confidential information,
trade secrets, and inventions in the Corporation's highly competitive industry
and to the Corporation's growth, it is understood and agreed as follows:
1. (a) The Employee acknowledges and agrees that his employment with
the Corporation will necessarily involve his understanding of and access to
certain trade secrets and confidential information pertaining to the business
and affairs of the Corporation and its customers and suppliers, including
without limitation, information relating to products, policies, processes,
formulas, operational methods, hardware, software, technology, programs,
research, data, know-how, inventions, improvements, marketing plans, product
plans, strategies, forecasts, customer lists, and technical processes of the
Corporation or any customer or supplier of the Corporation, and understands that
he will enjoy a special position of trust and confidence with the Corporation.
Accordingly, the Employee agrees that, except as required in the ordinary course
of performing his duties as an Employee of the Corporation or as authorized in
writing by the Corporation, he will keep secret all such trade secrets and
confidential information and will not directly or indirectly, either during the
term of his employment or at any time thereafter, disclose or disseminate to any
unauthorized third party or make use of, for any purpose whatsoever, any trade
secret or confidential information of the Corporation or any customer or
supplier of the Corporation.
(b) The preceding paragraph, however, shall not apply to
information (i) which at the time of disclosure was in the public domain, (ii)
which at the time of disclosure the Employee proves was already known to him
from other sources and capable of being used or disclosed by him, as the case
may be, free of any other agreements or restrictions or (iii) which the Employee
has received from third parties having the right to disclose such information
otherwise than pursuant to his employment by the Corporation.
2. (a) The Employee further agrees that he will not, on the termination
of his employment for any reason, remove or retain, without the express consent
of the Board of Directors of the Corporation, any correspondence, figures,
specifications, calculations, letters, notes, notebooks, reports, papers,
instruments, software, drawings, designs, flow-charts, programs, proposals,
blueprints, manuals (including all copies, whether prepared by the Employee or
others) or any other document, material, or information of any type or
description concerning the Corporation, customers, or products of the
Corporation or processes of or used by the Corporation.
(b) Title to all such documents, materials, and information
disclosed, made available or to which access may otherwise be available to the
Employee and all rights therein, including all rights in applicable patents,
trademarks and copyrights, shall remain vested in the Corporation, and such
documents, materials and information, together with all ideas and concepts
contained therein, are understood to be trade secrets of the Corporation subject
to paragraph 1 of this Agreement.
(c) The Employee agrees that the Corporation may from time to
time adopt rules and regulations regarding the manner in which trade secrets and
confidential information is treated. In such event, the Employee will comply
with all such rules and regulations. The Employee agrees not to publish, without
prior written approval of a duly authorized officer of the Corporation, any
confidential information or trade secrets, whether or not subject to patent,
copyright or other similar protections. The Employee further agrees to take all
reasonable steps to prevent any such documents, materials, and information
(including the ideas and concepts contained therein) from being used by or
disclosed to persons, firms, or entities who are not authorized to use or
receive same.
3. The Employee will immediately disclose in writing to the Corporation
or any persons designated by it and preserve as confidential information (i) any
and all inventions, improvements, hardware, software, technology, processes,
designs, materials, products, developments, discoveries, and other technical
information and know-how, whether or not subject to patent, copyright,
trademark, or other statutory protection and whether or not reduced to practice
(all of the foregoing being hereinafter referred to as "Inventions) that he may
conceive, make, invent, develop, suggest, or reduce to practice during the
period of his employment with the Corporation or within one year after the
termination of employment and (ii) any and all improvements on such Inventions
("Improvements") conceived, made, invented, developed, reduced to practice, or
acquired by him at any time during the term of employment or within one year
after the termination of employment (in each such case, whether individually or
jointly with any other person or persons and whether in the course of the
Employee's employment or otherwise). The Employee agrees that all such
Inventions and Improvements which the Corporation in its sole discretion
determines to be useful in or in any way related to the actual or contemplated
business or research or development of the Corporation or the industries of
which the Corporation is or reasonably could be a part of, shall be the sole,
exclusive, and absolute property of the Corporation, whether or not patent,
trademark, or copyright applications are filed thereon. The Employee will keep
and maintain active and current written records of all Inventions and
Improvements and of other data and material, in the form of notes, sketches,
drawings, reports, documents, and other papers relating thereto, all of which
shall be the sole and exclusive property of the Corporation and available to it
at all times and shall be surrendered by Employee to the Corporation on request,
and Employee will not retain any copies thereof.
4. The Corporation shall have the right to use and/or apply for patent,
trademark, copyright, and other statutory or common law protection for such
Inventions and Improvements in any and all countries. The Employee further
agrees to assist the Corporation in every proper way (but at the Corporation's
expense) to obtain and from time to time enforce, patent, trademark, copyright,
and other statutory or common law protection for such Inventions and
Improvements in any and all countries. In this connection, the Employee will, at
any time and from time to time, whether during or following his employment with
the Corporation, at the Corporation's request and expense but without additional
compensation to the Employee, execute any and all papers covering such
Inventions and Improvements, as well as any paper which may be considered
necessary or helpful by the Corporation:
(I) to use and /or apply for (through the attorneys of the
Corporation) and attain such patent, trademark, copyright, and other statutory
or common law protections therefor, to protect otherwise the Corporation's
interest in such Inventions and Improvements and to enforce same; and
(ii) to assign and transfer all such Inventions and
Improvements to the Corporation or to persons designated by the Corporation.
5. The Employee shall be entitled, at his own initiative and expense,
to apply for and obtain patent, trademark, copyright, and other statutory or
common law protection, in any and all countries, for any Inventions or
Improvements conceived, made, invented, developed, suggested, or reduced to
practice by the Employee if such Invention or Improvement is:
(i) conceived, made, invented, developed, suggested, or
reduced to practice by the Employee other than in the course of performing his
normal or specially assigned duties for the Corporation;
(ii) not conceived, made, invented, developed, suggested, or
reduced to practice in whole or in part in conjunction with or otherwise with
the help of any other person employed or otherwise engaged by the Corporation;
(iii) not conceived, made, invented, developed, suggested, or
reduced to practice by the Employee with the use of any material, facility,
document, information, or Invention possessed by the Corporation, and which is
not generally known to the public; and
(iv) not useful in or in any way related to the actual or
contemplated business or research or development of the Corporation or the
industries of which the Corporation is or reasonably could be a part.
6. The Employee further agrees that during the period of his employment
with the Corporation and for a period of one (1) year following the termination
of his employment with the Corporation for any reason whatsoever, he will not,
directly or
indirectly, under any circumstances whatsoever, own, manage, operate, engage,
control, participate, or become interested in the ownership, management,
operation, or control of, or be connected in any manner with, whether as
individual, partner, stockholder, director, officer, principal, agent, employee,
or consultant, or in any other relation or capacity whatsoever, any business,
enterprise, or endeavor which provides or contemplates providing to any customer
of the Corporation products or services which are the same or similar to or
compete with those provided by the Corporation. For purposes hereof, the term
"customer" shall mean any person, firm, or the Corporation to whom the
Corporation has provided products or services at anytime during the one-(1) year
period immediately preceding the date of termination of the Employee's
employment with the Corporation.
7. The Employee further agrees that during his employment with the
Corporation and for a period of (1) year thereafter, for any reason whatsoever,
he will not directly or indirectly:
(I) solicit, raid, entice, or induce any person, firm, or the
Corporation which presently is or at any time prior to the termination of his
employment shall be a client or customer of the Corporation to become a client
or customer of any person, firm, or the Corporation competing with The
Corporation;
(ii) solicit, raid, entice, or induce any person who presently
is or at any time prior to the termination of his employment shall be an
employee of The Corporation to become employed by any person, firm, or the
Corporation other than The Corporation ; or
(iii) approach any such person, firm, the Corporation, or
employee for such purpose or authorize or knowingly approve the taking of such
actions by any other person.
8. The Employee has identified on Exhibit A attached hereto a complete
list of all inventions or improvements which have been made or conceived or
first reduced to practice by the Employee alone or jointly with others prior to
his employment by the Corporation and which the Employee desires to exclude from
the operation of this Agreement. If there is no such list on Exhibit A, the
Employee represents that the Employee has made no such inventions or
improvements at the time of signing this Agreement.
9. By reason of the fact that irreparable harm would be sustained by
The Corporation in the event that there is a breach by the Employee of any of
the agreements set forth in this Agreement, it is agreed that, in addition to
any other rights that The Corporation may have under this Agreement or
otherwise, the Corporation shall be entitled to apply to any court of competent
jurisdiction and obtain specific performance and/or injunctive relief against
the Employee and against any third party in order to enforce or prevent any
breach or threatened breach of any of the agreements set forth in this
Agreement.
entitled to apply to any court of competent jurisdiction and obtain specific
performance and/or injunctive relief against the Employee and against any third
party in order to enforce or prevent any breach or threatened breach of any of
the agreements set forth in this Agreement.
10. Nothing contained in this Agreement shall be construed as a
contract of employment nor shall anything contained in this Agreement, impose
any obligation upon The Corporation to continue the employment of the Employee.
11. If any provision of this Agreement or any part of any such
provision is invalid, unlawful, or incapable of being enforced by reason of any
rule of law or public policy, all other conditions and provisions of this
Agreement which can be given effect without such invalid, unlawful, or
unenforceable provision shall, nevertheless remain in full force and effect. If
any obligation herein is held to be too broad to be enforced, it shall be
construed to be enforceable to the extent permitted by law.
12. The Employee agrees that this Agreement Shall continue beyond
Employee's employment with the Corporation and shall inure to the benefit of the
Corporation and its successors and assigns and shall be binding upon the
Employee and his heirs, executors, administrators, and other legal
representatives.
13. the Employee represents and warrants that he is not a party to any
agreement, contract, or understanding, whether of employment or otherwise, in
conflict with this Agreement or which would in any way restrict or prohibit him
from undertaking or performing employment for the Corporation. In this
connection, the Employee represents that he has not brought and will not bring
with him to the Corporation or use in the performance of his responsibilities at
the Corporation any materials or documents of a former employer which are not
generally known to the public, unless the Employee has first obtained written
authorization from the former employer for their possession and use, which
written authorization the Employer will deliver to the Corporation on or before
use of such materials or documents. The Employee hereby authorizes the
Corporation to make known the terms of this Agreement and the fact of his
responsibility under this Agreement to any person or entity, including without
limitation customers of the Corporation and the Employee's future employers.
14. Employee irrevocably consents to the exclusive jurisdiction of the
Courts of Common Pleas of Montgomery County, Pennsylvania, and/or the United
States District Court for the Eastern District of Pennsylvania in any and all
actions arising out of or relating to this Agreement and agrees to service of
process by certified mail, postage paid, mailed to the Employee's address set
forth in the records of the Corporation.
15. This Agreement and the performance of the parties
hereunder shall be governed by the laws of Pennsylvania. This Agreement may not
be modified, waived, abandoned, or otherwise terminated, in whole or in part,
except in writing signed by a duly authorized officer of The Corporation. This
Agreement constitutes the entire agreement between the parties with respects to
the subject matter hereof, and supersedes any and all earlier employee
agreements relating to Inventions and/or Improvements,
without extinguishing or diminishing in any manner rights heretofore acquired by
The Corporation thereunder.
/s/ Theodore J. Shoneck
(Signature of Employee)
Theodore J. Shoneck
(Name of Employee)
14 Yarmonth Ln
(Address)
Downingtown, PA 19335
15 December 1997
Date:
<PAGE>
CONDITIONS OF EMPLOYMENT
EXHIBIT A
List of Inventions or Improvements
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EXHIBIT 10.5
April 27, 1998
HAND DELIVER
Mr. Anthony R. Drury
714 Hoover Road
Blue Bell, PA 19422
Re: Matters Relating to Continuation as Senior
Vice President-Finance and Chief Financial Officer
Dear Tony:
Thank you for continuing, at the request of the Board of Directors of Quad
Systems Corporation (the "Company"), to serve as the Senior Vice
President-Finance and Chief Financial Officer (the "Senior V.P.-Finance/CFO") of
the Company. As you know, you will continue to hold your appointment as the
Senior V.P.-Finance/CFO at the pleasure and in the sole discretion of the
Company's Board of Directors. In connection with that appointment, under those
circumstances, you and the Company have agreed as follows:
i. Effective at the open of business on March 31, 1998, for so long as you
are the Senior V.P.-Finance/CFO, the Company shall:
(i) Pay you the gross amount of $2,692.31 per week ($140,000
annualized for continuing service as the Senior
V.P.-Finance/CFO) (the "Base Salary"), less usual withholding.
(The Board of Directors, in its sole discretion, from time to
time hereafter may consider increases in the Base Salary.)
(i) In addition to the Base Salary, while you are the Senior
V.P.-Finance/CFO, you will be eligible to participate in all
of the Company's group medical, dental, 401(k), group medical
spending program, deferred compensation program and any or all
other group insurance programs or other benefits now or
hereafter provided by the Company on the same basis as for
other employees of the Company (collectively, "Benefits").
Your usual contribution for coverage for the Benefits will be
due from you during this period.
(i) While you are the Senior V.P.-Finance/CFO, you are an
"Executive Employee" as defined in and subject to the
Company's Executive Severance Pay Plan effective January 26,
1996 attached hereto (the "Pay Plan"), as the same may
hereafter be amended from time to time, and your employment
and any "Severance Pay" (as defined in the Pay Plan) is
subject to the Pay Plan; provided, however, that to the extent
the terms of the Pay Plan conflict with terms of this letter,
the terms of this letter shall control over the terms of the
Pay Plan.
(i) In addition to the Base Salary, you may be eligible to receive bonuses
(singularly, a "Bonus" and, collectively, "Bonuses"), as determined in the
sole discretion of the Compensation Committee of the Board of Directors.
The goals to be achieved by you as the Senior V.P.-Finance/CFO to receive
Bonuses, as previously established for you for the Company's fiscal year
ending September 1998, shall remain in effect until and unless the
Compensation Committee, may in its sole discretion alter such goals and any
related targeted Bonus; however, it is acknowledged ------- that based on
current reasonable expectations and standards, a major goal for the Senior
V.P.-Finance/CFO is to identify and consummate arrangements for a strategic
partner for the Company's screen printer and/or oven businesses and that it
is expected that a significant goal for the Senior V.P.-Finance/CFO will be
to assume a major role in accomplishing such transactions and that
therefore it is likely that any such Bonus would be partially dependent on
such an achievement.
(i) In addition to the Base Salary, you are hereby granted, as of April 27,
1998 (the "Grant Date"), options ("Options") to purchase an aggregate of
20,000 shares of the Company's common stock, par value $.03 per share (the
"Common Stock"), which Options have an exercise price equal to the closing
price of the Common Stock on the Nasdaq National Market on the Grant Date,
vest in 25% increments on each of the first four anniversaries of the Grant
Date, are intended to be "incentive stock options" within the meaning of
the Internal Revenue Code of 1986, as amended, and are otherwise subject to
the terms and conditions of the Company's 1993 Stock Incentive Plan, as
amended, under which such Options are granted (the "Option Plan").
(i) In addition to the Base Salary, Options and Bonuses (if any), for so long
as you are the Senior V.P.-Finance/CFO, you will be entitled to all Company
paid holidays and vacation time, initially with three weeks vacation and,
on the anniversary of your original date of hire as a Company employee,
accruing at a rate of three weeks per year, until the tenth anniversary of
your original date of hire, after which vacation time will accrue at a rate
of four weeks per year.
2. (a) If a "Change of Control" of the Company occurs while you are the
Senior Vice President-Finance/CFO, notwithstanding any provision in the Pay Plan
to the contrary, you shall receive compensation as described below; provided,
however, that in any event of any sale of the Company's screen printer or oven
businesses or any portions thereof or any other transaction involving only the
screen printer or oven business that otherwise would be covered by the
definition of "Change of Control" set forth below shall not be deemed to
constitute a Change of Control unless such sale is a sale of substantially all
of the assets then held by the Company.
(b) For purposes of this letter, notwithstanding any contrary
definitions in any of the Option Plan, the Pay Plan or the "Conditions" (as
defined in Paragraph 3 below), a "Change of Control", any such event shall be
deemed to have occurred upon the earliest to occur of any of the following
events:
<PAGE>
(i) The date of consummation of a sale or other disposition of all or
substantially all of the Company's assets, or consummation of any
other such transaction or series of transactions, having similar
effect; or
(ii) the latest date on which both the stockholders of the Company (or the
Board of Directors if stockholder action is not required) and the
stockholders of the other constituent corporation (or its board of
directors if stockholder action is not required) have approved a
definitive agreement to merge, reorganize or consolidate the Company
with or into such other constituent corporation and the holders of the
voting securities of the Company immediately prior to such approval
will not represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 50%
of the voting power of the surviving entity; or the date on which the
stockholders of the Company (or the Board of Directors if stockholder
action is not required) have approved a definitive plan of complete
liquidation or dissolution of the Company; or
(iii)more than 50% of the Company's Board of Directors who had been
serving on the Company's Board of Directors at the time the Board of
Directors approves any transaction of the kind described in clauses
(i) and (ii) of the definition of "Change of Control" (individually, a
"Change of Control Transaction" and collectively, "Change of Control
Transactions") ceases to serve as members of the Company's Board of
Directors within three months after such approval has occurred.
If any Change of Control occurs, or your employment is terminated at any time
after the date which is thirty (30) calendar days before the date on which the
Company's Board of Directors approves any Change of Control Transaction, then
you shall be entitled to receive from the Company twelve months of Base Salary
and Benefits, with the Base Salary to be paid in full in one lump sum within 30
days after such Change of Control or termination of employment and with Benefits
to be paid on a monthly basis for twelve months after such Change of Control or
termination of employment, with your usual contribution for coverage for the
Benefits due from you during such twelve month period.
(c) If your employment as Senior Vice President-Finance/CFO is
terminated by the Company at any time other than after a Change of Control or
after the date which is thirty (30) calendar days before the date on which the
Board of Directors approves a Change of Control Transaction, due to action by
the Company's Board of Directors for any reason other than "cause" as described
in Section 3.2(b) of the Pay Plan, as amended below, notwithstanding any
provision in the Pay Plan to the contrary, you shall receive 30 Weeks of Pay
(including Benefits); provided, however, that such amount shall be limited to 24
Weeks of Pay (including Benefits) if at any time during the period in which you
are receiving "Severance Pay" as defined in the Pay Plan, you commence other
full-time employment. For purposes of this letter, in the definition of "cause"
in Section 3.2(b) of the Pay Plan, the words "absenteeism or tardiness,
insubordination" are hereby deleted, and after the words "the failure to comply
with the Company's rules, policies or procedures, which currently exist or are
hereafter adopted," the words "after notice of such failure has been given to
the Employee and the Employee has failed to cure such failure within 15 days of
such notice" are hereby added.
3. When you began employment with the Company, you signed an agreement
entitled "Conditions of Employment" in the form attached hereto (the
"Conditions"). Notwithstanding the provisions of the Conditions, the
non-competition period described in Paragraph 6 of the Conditions shall be
limited to six months after the "Termination Date" as defined in the Pay Plan
and your obligations to refrain from soliciting the Company's employees, as set
forth in Paragraph 7 of the Conditions, shall continue for a period of 18 months
after the Termination Date. In all other respects, the Conditions remain in full
force and effect, unaffected by this letter.
<PAGE>
4. This letter, the Pay Plan, the Option Plan and the Conditions
together embody the complete understanding and agreement between the parties
hereto and supersede any and all prior agreements between the parties, oral or
written, express or implied. Nothing contained herein or therein shall be
construed so as to constitute any entitlement by you to be the Chief Financial
Officer, receive the Base Salary, any Bonus or obtain any other continuation of
employment with the Company for any period of time other than at the continuing
pleasure of the Board of Directors in its sole discretion.
5. This letter 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.
6. If any provision of this letter is deemed unlawful or unenforceable
by a court of competent jurisdiction, the remaining provisions shall continue in
full force and effect.
If you agree that the terms set forth above properly set forth our
understanding, please sign this letter indicating your understanding and
agreement.
QUAD SYSTEMS CORPORATION
By:________________________
Vahram V. Erdekian, Director and Member
of the Compensation Committee of the Board
AGREED, UNDERSTOOD AND ACCEPTED
AS OF THE DATE SET FORTH ABOVE:
_________________________(SEAL)
Anthony R. Drury
<PAGE>
CONDITIONS OF EMPLOYMENT
As an inducement to QUAD SYSTEMS THE CORPORATION (the Corporation") to employ or
to continue to employ the undersigned, Theodore J. Shoneck (the "Employee"), and
in consideration of the employment or continued employment of the Employee by
the Corporation and the compensation and other benefits paid or to be paid by
the Employee, and in recognition of the importance of confidential information,
trade secrets, and inventions in the Corporation's highly competitive industry
and to the Corporation's growth, it is understood and agreed as follows:
1. (a) The Employee acknowledges and agrees that his employment with
the Corporation will necessarily involve his understanding of and access to
certain trade secrets and confidential information pertaining to the business
and affairs of the Corporation and its customers and suppliers, including
without limitation, information relating to products, policies, processes,
formulas, operational methods, hardware, software, technology, programs,
research, data, know-how, inventions, improvements, marketing plans, product
plans, strategies, forecasts, customer lists, and technical processes of the
Corporation or any customer or supplier of the Corporation, and understands that
he will enjoy a special position of trust and confidence with the Corporation.
Accordingly, the Employee agrees that, except as required in the ordinary course
of performing his duties as an Employee of the Corporation or as authorized in
writing by the Corporation, he will keep secret all such trade secrets and
confidential information and will not directly or indirectly, either during the
term of his employment or at any time thereafter, disclose or disseminate to any
unauthorized third party or make use of, for any purpose whatsoever, any trade
secret or confidential information of the Corporation or any customer or
supplier of the Corporation.
(b) The preceding paragraph, however, shall not apply to
information (i) which at the time of disclosure was in the public domain, (ii)
which at the time of disclosure the Employee proves was already known to him
from other sources and capable of being used or disclosed by him, as the case
may be, free of any other agreements or restrictions or (iii) which the Employee
has received from third parties having the right to disclose such information
otherwise than pursuant to his employment by the Corporation.
2. (a) The Employee further agrees that he will not, on the termination
of his employment for any reason, remove or retain, without the express consent
of the Board of Directors of the Corporation, any correspondence, figures,
specifications, calculations, letters, notes, notebooks, reports, papers,
instruments, software, drawings, designs, flow-charts, programs, proposals,
blueprints, manuals (including all copies, whether prepared by the Employee or
others) or any other document, material, or information of any type or
description concerning the Corporation, customers, or products of the
Corporation or processes of or used by the Corporation.
(b) Title to all such documents, materials, and information
disclosed, made available or to which access may otherwise be available to the
Employee and all rights therein, including all rights in applicable patents,
trademarks and copyrights, shall remain vested in the Corporation, and such
documents, materials and information, together with all ideas and concepts
contained therein, are understood to be trade secrets of the Corporation subject
to paragraph 1 of this Agreement.
(c) The Employee agrees that the Corporation may from time to
time adopt rules and regulations regarding the manner in which trade secrets and
confidential information is treated. In such event, the Employee will comply
with all such rules and regulations. The Employee agrees not to publish, without
prior written approval of a duly authorized officer of the Corporation, any
confidential information or trade secrets, whether or not subject to patent,
copyright or other similar protections. The Employee further agrees to take all
reasonable steps to prevent any such documents, materials, and information
(including the ideas and concepts contained therein) from being used by or
disclosed to persons, firms, or entities who are not authorized to use or
receive same.
3. The Employee will immediately disclose in writing to the Corporation
or any persons designated by it and preserve as confidential information (i) any
and all inventions, improvements, hardware, software, technology, processes,
designs, materials, products, developments, discoveries, and other technical
information and know-how, whether or not subject to patent, copyright,
trademark, or other statutory protection and whether or not reduced to practice
(all of the foregoing being hereinafter referred to as "Inventions) that he may
conceive, make, invent, develop, suggest, or reduce to practice during the
period of his employment with the Corporation or within one year after the
termination of employment and (ii) any and all improvements on such Inventions
("Improvements") conceived, made, invented, developed, reduced to practice, or
acquired by him at any time during the term of employment or within one year
after the termination of employment (in each such case, whether individually or
jointly with any other person or persons and whether in the course of the
Employee's employment or otherwise). The Employee agrees that all such
Inventions and Improvements which the Corporation in its sole discretion
determines to be useful in or in any way related to the actual or contemplated
business or research or development of the Corporation or the industries of
which the Corporation is or reasonably could be a part of, shall be the sole,
exclusive, and absolute property of the Corporation, whether or not patent,
trademark, or copyright applications are filed thereon. The Employee will keep
and maintain active and current written records of all Inventions and
Improvements and of other data and material, in the form of notes, sketches,
drawings, reports, documents, and other papers relating thereto, all of which
shall be the sole and exclusive property of the Corporation and available to it
at all times and shall be surrendered by Employee to the Corporation on request,
and Employee will not retain any copies thereof.
4. The Corporation shall have the right to use and/or apply for patent,
trademark, copyright, and other statutory or common law protection for such
Inventions and Improvements in any and all countries. The Employee further
agrees to assist the Corporation in every proper way (but at the Corporation's
expense) to obtain and from time to time enforce, patent, trademark, copyright,
and other statutory or common law protection for such Inventions and
Improvements in any and all countries. In this connection, the Employee will, at
any time and from time to time, whether during or following his employment with
the Corporation, at the Corporation's request and expense but without additional
compensation to the Employee, execute any and all papers covering such
Inventions and Improvements, as well as any paper which may be considered
necessary or helpful by the Corporation:
(I) to use and /or apply for (through the attorneys of the
Corporation) and attain such patent, trademark, copyright, and other statutory
or common law protections therefor, to protect otherwise the Corporation's
interest in such Inventions and Improvements and to enforce same; and
(ii) to assign and transfer all such Inventions and
Improvements to the Corporation or to persons designated by the Corporation.
5. The Employee shall be entitled, at his own initiative and expense,
to apply for and obtain patent, trademark, copyright, and other statutory or
common law protection, in any and all countries, for any Inventions or
Improvements conceived, made, invented, developed, suggested, or reduced to
practice by the Employee if such Invention or Improvement is:
(i) conceived, made, invented, developed, suggested, or
reduced to practice by the Employee other than in the course of performing his
normal or specially assigned duties for the Corporation;
(ii) not conceived, made, invented, developed, suggested, or
reduced to practice in whole or in part in conjunction with or otherwise with
the help of any other person employed or otherwise engaged by the Corporation;
(iii) not conceived, made, invented, developed, suggested, or
reduced to practice by the Employee with the use of any material, facility,
document, information, or Invention possessed by the Corporation, and which is
not generally known to the public; and
(iv) not useful in or in any way related to the actual or
contemplated business or research or development of the Corporation or the
industries of which the Corporation is or reasonably could be a part.
6. The Employee further agrees that during the period of his employment
with the Corporation and for a period of one (1) year following the termination
of his employment with the Corporation for any reason whatsoever, he will not,
directly or
indirectly, under any circumstances whatsoever, own, manage, operate, engage,
control, participate, or become interested in the ownership, management,
operation, or control of, or be connected in any manner with, whether as
individual, partner, stockholder, director, officer, principal, agent, employee,
or consultant, or in any other relation or capacity whatsoever, any business,
enterprise, or endeavor which provides or contemplates providing to any customer
of the Corporation products or services which are the same or similar to or
compete with those provided by the Corporation. For purposes hereof, the term
"customer" shall mean any person, firm, or the Corporation to whom the
Corporation has provided products or services at anytime during the one-(1) year
period immediately preceding the date of termination of the Employee's
employment with the Corporation.
7. The Employee further agrees that during his employment with the
Corporation and for a period of (1) year thereafter, for any reason whatsoever,
he will not directly or indirectly:
(I) solicit, raid, entice, or induce any person, firm, or the
Corporation which presently is or at any time prior to the termination of his
employment shall be a client or customer of the Corporation to become a client
or customer of any person, firm, or the Corporation competing with The
Corporation;
(ii) solicit, raid, entice, or induce any person who presently
is or at any time prior to the termination of his employment shall be an
employee of The Corporation to become employed by any person, firm, or the
Corporation other than The Corporation ; or
(iii) approach any such person, firm, the Corporation, or
employee for such purpose or authorize or knowingly approve the taking of such
actions by any other person.
8. The Employee has identified on Exhibit A attached hereto a complete
list of all inventions or improvements which have been made or conceived or
first reduced to practice by the Employee alone or jointly with others prior to
his employment by the Corporation and which the Employee desires to exclude from
the operation of this Agreement. If there is no such list on Exhibit A, the
Employee represents that the Employee has made no such inventions or
improvements at the time of signing this Agreement.
9. By reason of the fact that irreparable harm would be sustained by
The Corporation in the event that there is a breach by the Employee of any of
the agreements set forth in this Agreement, it is agreed that, in addition to
any other rights that The Corporation may have under this Agreement or
otherwise, the Corporation shall be entitled to apply to any court of competent
jurisdiction and obtain specific performance and/or injunctive relief against
the Employee and against any third party in order to enforce or prevent any
breach or threatened breach of any of the agreements set forth in this
Agreement.
entitled to apply to any court of competent jurisdiction and obtain specific
performance and/or injunctive relief against the Employee and against any third
party in order to enforce or prevent any breach or threatened breach of any of
the agreements set forth in this Agreement.
10. Nothing contained in this Agreement shall be construed as a
contract of employment nor shall anything contained in this Agreement, impose
any obligation upon The Corporation to continue the employment of the Employee.
11. If any provision of this Agreement or any part of any such
provision is invalid, unlawful, or incapable of being enforced by reason of any
rule of law or public policy, all other conditions and provisions of this
Agreement which can be given effect without such invalid, unlawful, or
unenforceable provision shall, nevertheless remain in full force and effect. If
any obligation herein is held to be too broad to be enforced, it shall be
construed to be enforceable to the extent permitted by law.
12. The Employee agrees that this Agreement Shall continue beyond
Employee's employment with the Corporation and shall inure to the benefit of the
Corporation and its successors and assigns and shall be binding upon the
Employee and his heirs, executors, administrators, and other legal
representatives.
13. the Employee represents and warrants that he is not a party to any
agreement, contract, or understanding, whether of employment or otherwise, in
conflict with this Agreement or which would in any way restrict or prohibit him
from undertaking or performing employment for the Corporation. In this
connection, the Employee represents that he has not brought and will not bring
with him to the Corporation or use in the performance of his responsibilities at
the Corporation any materials or documents of a former employer which are not
generally known to the public, unless the Employee has first obtained written
authorization from the former employer for their possession and use, which
written authorization the Employer will deliver to the Corporation on or before
use of such materials or documents. The Employee hereby authorizes the
Corporation to make known the terms of this Agreement and the fact of his
responsibility under this Agreement to any person or entity, including without
limitation customers of the Corporation and the Employee's future employers.
14. Employee irrevocably consents to the exclusive jurisdiction of the
Courts of Common Pleas of Montgomery County, Pennsylvania, and/or the United
States District Court for the Eastern District of Pennsylvania in any and all
actions arising out of or relating to this Agreement and agrees to service of
process by certified mail, postage paid, mailed to the Employee's address set
forth in the records of the Corporation.
15. This Agreement and the performance of the parties
hereunder shall be governed by the laws of Pennsylvania. This Agreement may not
be modified, waived, abandoned, or otherwise terminated, in whole or in part,
except in writing signed by a duly authorized officer of The Corporation. This
Agreement constitutes the entire agreement between the parties with respects to
the subject matter hereof, and supersedes any and all earlier employee
agreements relating to Inventions and/or Improvements,
without extinguishing or diminishing in any manner rights heretofore acquired by
The Corporation thereunder.
/s/ Anthony R. Drury
(Signature of Employee)
Anthony R. Drury
(Name of Employee)
714 Hoover Rd
Address
Blue Bell, PA 19422
1/29/90
Date:
<PAGE>
CONDITIONS OF EMPLOYMENT
EXHIBIT A
List of Inventions or Improvements
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<NAME> QUAD SYSTEMS CORPORATION
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