Exhibit 10.3
[Certance Letterhead]
TRANSACTION BONUS
AND SEVERANCE PROTECTION LETTER
January 4, 2005
Mr. Howard Matthews:
Dear Howard,
Certance LLC, a Delaware limited
liability company (the “Company”), considers it
essential to foster the continuous employment of the key management
personnel of the Company. In this connection, the Board of
Directors of the Company (the “Board”) recognizes that,
in view of the Company’s current desire to merge with another
corporation, the possibility of a change of control of the Company
exists and that possibility, and the uncertainty and questions that
it may raise, could result in your departure or distraction to the
detriment of the Company. Accordingly, on behalf of the
Board, I am pleased to inform you that you have been selected by
the Board as a key employee eligible to receive the Transaction
Bonus and certain severance protections described below.
If you are actively employed by
the Company as of the consummation of the “Contemplated
Merger” (as defined below) (i) you will be entitled to
receive a Transaction Bonus in the amount of $408,398.10 (a
“Transaction Bonus”), subject to your satisfaction of
the terms and conditions set forth below, (ii) if at any time
within the eighteen month period commencing immediately after the
consummation of such Contemplated Merger (the “Severance
Protection Period”) your employment is terminated by the
Company (or its successor) without “Cause” or by you
for “Good Reason” (each as defined under below) subject
to your satisfaction of the terms and conditions set forth below,
you will be entitled to receive a cash payment equal to $900,000
(200% of your aggregate annual base salary and annual bonus for the
preceding calendar year) (the “Severance Payments”);
provided, however , that, unless otherwise provided by
action of the Board, the Transaction Bonus and the Severance
Payments will be payable to you only in the event the Contemplated
Merger is consummated prior to July 1, 2005. Notwithstanding
anything to the contrary in this agreement, you acknowledge that if
you receive an offer of employment from Quantum and accept the
offer, then you waive any right to claim that the employment
arrangement as accepted constitutes Good Reason.
You will not be entitled to any
Severance Payments in the event of (i) your termination of
employment for any reason prior to or after the Severance
Protection Period or (ii) your termination of employment
during the Severance Protection Period due to any reason other than
those described above, including your voluntary resignation of
employment without Good Reason, termination of employment by the
Company for Cause or your death “Disability” (as
defined below) or retirement.
Any Transaction Bonus that becomes
payable to you hereunder will be paid to you in a lump sum cash
payment 120 days following the consummation of the Proposed
Merger. Any Severance Payment that becomes payable to you
hereunder will be paid to you in twelve (12) equal monthly
installments (on the first day of each month) commencing with the
first day of the month immediately succeeding the month in which
your termination of employment occurs.
In consideration for your
opportunity to receive the Severance Payments hereunder, you hereby
agree to execute an effective release of claims in a form
acceptable to the Company. Your entitlement to any Severance
Payment hereunder is expressly conditioned upon your execution of
an effective release of claims in a form acceptable to the
Company.
&nbs
