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:
(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.
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
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:
CONDITIONS OF EMPLOYMENT
EXHIBIT A
List of Inventions or Improvements
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