SEPARATION AGREEMENT
AND GENERAL RELEASE
This
Separation Agreement and General Release (this “
Agreement
”) is made as of this 31st day of May 2008 (the
“ Effective
Date ”), by and between Jim Patterson (the
“ Employee
”) and Schawk USA Inc. and its affiliates (collectively,
the “ Company
”), concerning the termination of the Employee’s
employment with the Company.
WHEREAS,
the Employee’s employment as Senior Vice President &
Chief Financial Officer of the Company will be terminated by
the Company effective on May 31, 2008 (the “ Separation
Date ”); and
WHEREAS,
the Company and the Employee intend that this Agreement shall
be in complete settlement of all rights of the Employee
relating to the Employee’s employment by the
Company.
NOW
THEREFORE, in consideration of the mutual promises and
agreements set forth below, the Company and the Employee agree
as follows:
1.
Separation/Transition .
(a)
The
Employee’s employment as Senior Vice President & Chief
Financial Officer of the Company will terminate as of the close of
business on the Separation Date. Through the Separation
Date, the Employee will continue to: (i) serve as an employee of
the Company with the same duties and responsibilities as before,
(ii) be paid the Employee’s currently weekly salary ($
5,673.08 per
week), and (iii) be eligible to participate in all benefit plans
and programs available to employees of Schawk USA Inc. generally,
in accordance with the terms of such plans and
programs.
(b)
From
June 1, 2008 through December 31, 2008, or an earlier date as
mutually agreed upon by the Company and the Employee (the “
Termination
Date ”) (this period shall be referred to as the
“ Transition
Period ”), the Employee will be relieved of his
customary duties and responsibilities and shall no longer report to
any office of the Company; provided, however, the Employee shall
make himself available during business hours, as requested by the
Company, for meetings and phone consultation with Company personnel
at a maximum of eight (8) hours per week. During the
Transition Period, the Employee will: (i) take reasonable and
appropriate actions to cooperatively and smoothly transition the
duties and responsibilities of the position of Chief Financial
Officer to his successor, (ii) be paid a weekly salary of $
1,200 , and
(iii) be eligible to participate in the Company’s medical,
dental and vision plans, in accordance with the terms of such plans
and programs. Any business expenses properly incurred by
the Employee prior to the Termination Date will be reimbursed in
accordance with the Company’s expense reimbursement
policy.
(c)
In
the event the Employee voluntarily resigns prior to the Termination
Date, the Employee shall not be eligible for any of benefits or
payments provided for in this Agreement.
2.
Severance Benefits/Payments . Except as may
be modified by the following provisions of this Section 2, the
Company’s obligation to pay any of the severance
benefits/payments set forth in this Section 2 is conditioned upon
the Employee’s: (a) execution and delivery of the a
General Release and Waiver attached as Exhibit A to
this Agreement (the “ Release
”) during the 21-day period following the Separation Date
with such delivery pursuant to Section 11(d) below, (ii)
non-revocation of the Release, and (iii) continued compliance with
all of the terms and conditions of this Agreement.
(a)
Severance Pay . The Employee shall receive a
severance payment equal to thirteen (13) weeks of base salary at
the Employee’s current rate for a total severance payment of
$ 73,750 , which
shall be payable in weekly equal installments during the Transition
Period, in lieu of any earned severance as outlined in the
Company’s severance pay plan.
(b)
Equity Awards . Subject to Sections 2(b)(i)
and (ii) below and effective as of the Separation Date, the
Employee shall forfeit and/or relinquish any and all interests and
rights in and under all unvested equity awards granted under any
plan or program maintained by the Company. The
Employee’s outstanding equity awards and the treatment of
such awards are summarized on Exhibit
B
hereto. Other than the awards set forth on Exhibit B
hereto, the Employee acknowledges and agrees that the Employee does
not possess, nor is the Employee entitled to, any other equity
awards under any plan or program of the Company.
(i)
All
unexercised options which are vested as of the Separation Date
shall continue to be exercisable for a period of ninety (90) days
following the Termination Date, except the 25,000 options granted
to the Employee on February 23, 1999 shall expire on February 23,
2009. This expiration treatment is as documented on
Exhibit
B to this Agreement.
(ii)
The
4,100 shares of restricted stock granted to the Employee on August
8, 2006 shall vest on August 8, 2009 as if the Employee was
employed by the Company on such date. This vesting
treatment is as documented on Exhibit B to
this Agreement.
(c)
Outplacement Services . The Company shall pay up
to a maximum of $5,000 for a national executive outplacement firm
chosen by the Company following the Separation Date to assist the
Employee in his transition to new employment. The
outplacement services firm chosen by the Company is Scherer,
Schneider & Paulick.
(d)
Physical Exam . The Company shall pay the
reasonable fees incurred by the Employee in connection with a
medical physical examination.
(e)
Medical Benefits . After the Termination Date,
the Employee’s entitlement to continue family medical
coverage, which shall include dental, vision and prescription
coverage, under the benefit plans of the Company operated in the
United States will be determined in accordance with the provisions
of COBRA.
(f)
Electronic Devices . The Company shall continue
to pay the reasonable monthly Blackberry and Sprint Wireless card
service charges incurred by the Employee through the Termination
Date.
3.
Termination of Benefits . Except as specifically
provided in this Agreement with respect to plans or arrangements
specifically identified in this Agreement, the Employee’s
continued participation in all employee benefit plans (pension and
welfare) and compensation plans, including the Company’s
401(k) plan and deferred compensation plan, will cease as of the
Separation Date. Any payments made to the Employee
pursuant to this Agreement, other than with respect to the
continued payment of salary to the Separation Date, shall be
disregarded for purposes of determining the amount of benefits to
be accrued on behalf of the Employee under any pension or other
benefit plan maintained by the Company. Nothing
contained herein shall limit or otherwise impair the
Employee’s right to receive pension or similar benefit
payments which are vested as of the Separation Date under any
applicable tax qualified 401(k) or other tax qualified benefit
plan.
4.
No Other Payments . The Employee agrees and
acknowledges that, other than as specifically provided for in this
Agreement, no additional payments are due from the Company on any
basis whatsoever.
5.
Release . As part of this Agreement, and in
consideration of the additional payments provided to the Employee
in accordance with this Agreement, the sufficiency of which is
hereby acknowledged, the Employee is required to execute the
Release within the 21-day period following the Separation Date,
deliver the executed Release to the Company per Section 11(d)
below, and not revoke the Release.
6.
Assistance with Claims . The Employee agrees to cooperate
with the Company or any affiliate in the defense, prosecution or
evaluation of any pending or potential claims or proceedings
involving or affecting the Company or any affiliate arising during
the period of Employee’s employment with the Company (the
“ Employment
Period ”) or relating to any decisions in which the
Employee participated or any matter of which the Employee had
knowledge. The Employee agrees, unless precluded by law,
to promptly inform the Company if the Employee is asked to
participate (or otherwise become involved) in any claims that may
be filed against the Company or any affiliate relating to the
Employment Period. The Employee also agrees, unless
precluded by law, to promptly inform the Company if the Employee is
asked to assist in any investigation (whether governmental or
private) of the Company or any affiliate (or their actions)
relating to any matter, regardless of whether a lawsuit has then
been filed against the Company or any affiliate with respect to
such investigation. Employee will attend and participate
in meetings and interviews conducted by Company personnel, and/or
attorneys appointed by the Company and may be represented by
counsel who may attend such meetings and interviews, and execute
written affidavits confirming the Employee’s statements in
such meetings in respect of any such matters; provided such
meetings do not unreasonably interfere with the Employee’s
employment or self-employment entered into after the Separation
Date. The Employee will make himself available for the
foregoing at mutually convenient times during business hours from
time to time as reasonably requested by the
Company. Promptly upon the receipt of the
Employee’s written request, the Company agrees to reimburse
the Employee for all reasonable out-of-pocket expenses associated
with such cooperation, including, without
limitation,
meals, lodging, travel, and ground transportation expenses;
provided, however, subject to Section 11(k) of this Agreement, that
such reimbursement shall specifically exclude any fees for legal
representation engaged by the Employee, that is not otherwise
reimbursable pursuant to the Company’s policies in effect at
such time or the Company’s By-Laws. The Employee
will be indemnified for such matters as any other former Officer of
the Company is indemnified pursuant to the Company
By-Laws. This Section 6 shall not preclude the Employee
from responding to an inquiry in an honest manner.
7.
Non-Disparagement .
(a)
In
accordance with normal ethical and professional standards, the
Employee will refrain from taking actions or making statements,
written or oral, which defame the goodwill or reputation of the
Company, or which will constitute willful misconduct under
circumstances where it is reasonable for the Employee or the
Company to anticipate or to expect that the natural consequences of
such statements or conduct by the Employee will adversely affect
the business or reputation of the Company or its affiliates or the
morale of its employees.
(b)
The
Company agrees that it will refrain from taking actions or making
statements, written or oral, which defame the goodwill or
reputation of the Employee, or which will constitute willful
misconduct under circumstances where it is reasonable for the
Employee or the Company to anticipate or to expect that the natural
consequences of such statements or conduct by the Company will
adversely affect the reputation of the Employee.
(c)
The
provisions of this Section 7(a) and 7(b) shall not apply to
testimony as a witness, any disclosure required by law to be made
by the Company or the Employee, or the assertion of or defense
against any claim of breach of this Agreement and shall not require
either party to make false statements or disclosures.
8.
Restrictive Covenants .
(a)
Confidentiality . In the course of the
Employee’s services to the Company through the Termination
Date, the Employee was given access to and otherwise obtained
knowledge of certain trade secrets and confidential and proprietary
information pertaining to the business of the Company and its
affiliates. After the Termination Date, the Employee
will not, directly or indirectly, without the prior written consent
of the Company, disclose or use for the benefit of any person,
corporation or other entity, including himself, any trade secrets
or other confidential or proprietary information concerning the
Company or its affiliates, including, but not limited to,
information pertaining to their clients, services, products,
earnings, finances, operations, marketing, methods or other
activities; provided, ho
