EXHIBIT 10.33
SEVERANCE AGREEMENT
AND GENERAL RELEASE
This Severance Agreement and Release
of All Claims (hereinafter “ Agreement ”) is
made and entered into by and between THREE-FIVE SYSTEMS,
INC. , a Delaware corporation (hereinafter referred to as
“ Employer ”), and JEFFREY D. BUCHANAN
(hereinafter referred to as “ Employee ”).
RECITALS
WHEREAS , Employee has been
employed by Employer as its Executive Vice President, Chief
Financial Officer, Secretary, and Treasurer, and has served as a
Director of Employer’s Board of Directors.
WHEREAS , Employee has
executed the resignation letter attached hereto as
Exhibit A , indicating Employee’s employment and
any other duties with Employer and its subsidiaries have terminated
effective February 1, 2005 (“ Cessation Date
”); and
WHEREAS , the parties, in
order to settle and compromise fully and finally any and all claims
and potential claims arising out of Employee’s employment and
the cessation thereof, have agreed to resolve these matters on the
terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE , in
consideration of the mutual promises and covenants contained
herein, the parties agree as follows:
1. Recitals . The
recitals set forth above are true, accurate, and correct, and are
incorporated in this Agreement by this reference and made a
material part of this Agreement.
2. Consideration .
A.
Severance Payments . In consideration for Employee’s
execution of and compliance with this Agreement, Employer agrees
tender to Employee severance in the amount of One Hundred and
Sixty-Five Thousand Dollars and 00/100 ($165,000.00) (“
Severance Pay ”), which represents nine months of
(gross) base pay. Said Severance Pay shall be payable to
Employee in nine equal installments of $18,333.33, minus statutory
deductions, payable on the first day of each month during the
Severance Period. The period commencing on Cessation Date and
ending on October 1, 2005 shall be referred to as the “
Severance Period ”. The parties agree that the first
installment shall be tendered to Employee on February 1, 2005
provided that Employee has executed and delivered this Agreement,
and provided Employee has not revoked this Agreement under
Section 11 hereto.
B.
Stock Options . The parties hereto acknowledge that, as of
the date of this Agreement, Employee holds the options to purchase
common stock of Employer (the “ Options ”), as
set forth on Exhibit B-1 . The Options set forth on
Exhibit B-2 shall be exercised by Employee within
90 days following the Cessation Date or cancelled pursuant to
their terms. As further and additional consideration for
Employee’s execution of and compliance with this Agreement,
and notwithstanding any provision of Employer’s stock option
plans or any stock option agreement with Employee covering such
Options to the contrary, Employer shall extend the expiration date
of the Options set forth on Exhibit B-3 to, and
Employee shall have the right to exercise such Options set forth on
Exhibit B-3 until, the earlier of
(a) February 1, 2010; or (b) the expiration date of
the respective Option pursuant to the stock option agreement
covering such Option. All other Options set forth on
Exhibit B-1 that are not set forth on Exhibits B-2
or B-3 shall be cancelled as of the Cessation Date.
C.
COBRA Premium Reimbursement . As further and additional
consideration for Employee’s execution of and compliance with
this Agreement, Employer shall reimburse the cost of the premium
for continuation of group health insurance coverage for Employee,
his spouse and dependents, to the extent they were plan
participants as of Employee’s Cessation Date, should
Employee, his spouse and dependents (collectively referred to as
Employee’s Qualified Beneficiaries) elect continuation
coverage under the Consolidated Omnibus Budget Reconciliation Act
of 1987, as amended, (COBRA) until January 31, 2006, or until
Employee and Employee’s Qualified Beneficiaries are covered
under another health insurance plan, whichever is earlier. Employee
shall be responsible for timely payment to continue any insurance
benefits under this Section 2C . Employer shall
reimburse Employee upon Employee’s submission of proof of
payment. Employee understands, acknowledges, and agrees that in no
event shall Employee continue to pay the premium for continued
group health insurance coverage for Employee and/or his Qualified
Beneficiaries any time after January 31, 2006 and, thereafter.
Commencing with coverage for the month of February 2006,
Employee and his Qualified Beneficiaries shall be fully and solely
financially responsible for the payment of premiums for the
continuation of group health insurance coverage for themselves
under COBRA. Further, Employee acknowledges and agrees that, if
Employee is eligible for such coverage, he has received a COBRA
notice advising Employee of Employee’s rights to continuation
coverage for group health insurance.
D.
Executive Outplacement Services . Employer shall provide to
Employee nine months of executive outplacement services, commencing
on the Cessation Date. The provider of these services shall be
selected by Employer and any changes to the agreed upon services
with the provider must be approved in advance by Employer’s
Vice President of Human Resources.
3. Adequate
Consideration . Employee acknowledges and agrees that the
consideration to Employee set forth in Section 2
(including Subparagraphs) of this Agreement is in addition to
anything of value to which Employee is, as a matter of law,
otherwise entitled. Employee represents and agrees that he is not
entitled to and shall not receive any further compensation,
including salary, bonuses, vacation pay, or employee benefits after
the Cessation Date, provided Employee is not waiving any rights to
vested employee benefits, if any, as provided in applicable benefit
plans.
4. Release . In
consideration of his receipt of the severance package set forth in
Section 2 of this Agreement, Employee hereby fully, forever,
irrevocably, and unconditionally releases and discharges Employer,
including Employer’s past and present officers, directors,
stockholders, subsidiaries, affiliates, agents, employees,
representatives, lawyers, administrators, spouses, and all persons
acting by, through, under, or in concert with them (collectively,
the “ Released Parties ”), from any and all
claims or damages which he may have against them, or any of them,
which could have arisen out of any act or omission occurring from
the beginning of time to the effective date of this Agreement,
whether now known or unknown, asserted or unasserted. This release
includes, but is not limited to, any and all claims under Title VII
of the Civil Rights Act of 1964, as amended; the Age Discrimination
in Employment Act of 1967, as amended; the Americans with
Disabilities Act; the Fair Labor Standards Act, as amended; the
Family Medical Leave Act; CO
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