Exhibit 10.1

 

TRANSITION AGREEMENT AND RELEASE

 

This Transition Agreement and Release (this “Agreement”) is made as of June 20,
2016 (the "Effective Date”) by and between Matthew Bell, an individual
(“Employee”) and Modern Systems Corporation, a Delaware corporation (formerly
known as BluePhoenix Solutions USA, Inc.) (the “Company” and together with
Employee collectively referred to as the “Parties” or individually referred to
as a “Party”), a wholly-owned subsidiary of ModSys International Ltd.
(“Parent”).

 

RECITALS

 

WHEREAS, Employee is an at-will employee of the Company;

 

WHEREAS, the Parties entered into an employment offer dated September 15, 2015
(the “Employment Offer”), a Proprietary Information and Inventions Agreement
(the Confidentiality Agreement”), and a Stock Option Agreement between Parent
and Employee dated April 25, 2012) (the “Stock Option Agreement”).

 

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions, and demands that the Employee may have
against the Company and any of the Releasees (as defined in Section 7):

 

NOW, THEREFORE, in order to amicably resolve any outstanding matters related to
the employment relationship, and in consideration of the mutual promises made
herein, the Company and Employee hereby agree as follows:

 

1.       Continued Employment; Separation Date; Resignation as Officer.

 

(a)        Employee will continue as an at-will employee as of the Effective
Date, Employee's last day of employment with the Company will be the earlier of
February 28, 2017 or the date the Company or Employee terminates Employee's
at-will employment (the “Separation Date”). During the time period between the
Effective Date and the Separation Date (the “Transition Period”), Employee
agrees to continue to serve as CEO of the Company with the primary
responsibility of performing transitional duties for the Company including but
not limited to: hand-over of files, emails and guidance in order for the Company
to prepare of and be in compliance with corporate obligations and
account/banking authorizations, assisting with strategic initiatives, and all
other duties as reasonably assigned by the Board of Directors and reasonably
agreed to by Employee.

 

(b)        On the Separation Date, unless otherwise mutually agreed upon by the
parties, Employee will be deemed to have resigned voluntarily from all positions
held by him with Company, Parent and all other subsidiaries of Parent, without
any further required action by the Employee; provided however, if the Company or
Parent requests, Employee will execute any documents necessary to reflect his
resignation. The Company agrees to remove Employee as an officer or authorized
signatory of the Company, Parent and any of their related entities within ninety
(90) days of the Separation Date and further agrees Company will indemnify
Employee, as provided for in the General Corporation Law of the State of
Delaware and at Section 6.01 of the Company's By-laws, in the event of a lawsuit
or claim in which Employee is sued either jointly or separately for acts arising
out of the Company's failure to timely remove Employee as an officer and
signatory.

 

Transition Agreement and Release

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2.       Consideration including Additional Consideration.

 

(a)        Transition Period. In exchange for the consideration provided for
herein, through the Separation Date, the Company agrees to pay Employee's (i)
normal base salary compensation, less required deductions and withholdings, paid
on the Company's standard payroll dates beginning with the first payroll date
following the Effective Date and (ii) all other benefits consistent with what
has been historically paid or received (e.g. health care benefits, vacation
accrual, reimbursement of corporate expenses but excluding any performance
bonuses, required securities law filings incident to Employee's continued
employment through the Separation Date).

 

(b)        Supplement to Transition Agreement and Release. In consideration for
the execution by Employee of a Supplement to Transition Agreement and Release
within twenty-one (21) days after Employee's Separation Date, the form of which
is attached hereto as Exhibit A (the “Supplemental Release”), then as provided
in the Supplemental Release, the Company shall provide Employee with the
additional consideration described in subsections (i), (ii) and (iii) below
(collectively, “Additional Consideration”).

 

(i)        Restricted Stock Units. Subject to subsection (ii)(D) below and
Section 5 of the Employment Offer, Company agrees Employee will continue to vest
in the 2015 RSU Grant (as that term is defined in the Employment Offer). On the
Separation Date the Company will issue to Employee all vested shares; provided,
further that upon such issuance, Employee shall be responsible for all (A) tax
consequences and obligations as provided for in Section 7 of the Stock Option
Agreement and (B) reporting requirements under any SEC rules. For avoidance of
doubt, all remaining unvested restricted stock units will be forfeited as of the
Separation Date.

 

(ii)       Sale Bonus. Subject to subsection (iii)(D) below, during the
Transition Period, Employee shall be eligible for the sale transaction bonus as
specifically provided for in Section 4 (b) of the Employment Offer.

 

(iii)     Attorney's Fees. The Company will, upon presentation of an invoice
from Employee's separate legal counsel, pay up to $2,000 USD towards Employee’s
legal expenses incurred in connection with negotiation and execution of this
Agreement and Supplemental Release.

 

(iv)     Acknowledgement. Employee acknowledges and agrees that continued
employment through the Separation Date and the Additional Consideration provided
for herein constitutes adequate legal consideration for the promises and
representations made by Employee in the Agreement. Furthermore, with respect to
the Additional Consideration, vesting of any Restricted Stock Units (as provided
in subsection (i)) and any bonus (as provided in subsection (ii)), is contingent
upon Employee complying with the following conditions: (A) Employee must sign
the Supplemental Release on or within twenty-one (21) days following the
Separation Date; (B) Employee must not revoke the Supplemental Release; and (C)
the Supplemental Release must become effective and enforceable on the eighth day
after Employee signs the Supplemental Release, (D) Employee must continue to
abide by the surviving provisions, including the covenants not to compete or
solicit, of the Confidentiality Agreement; and (F) Employee must make himself
reasonably available to assist in the orderly transition of Employee’s duties to
other employees of the Company via telephone or in-person during the period
commencing on the Separation Date and continuing for ninety days thereafter.

 

(c)        In the event that the Company terminates Employee's employment during
the Transition Period prior to February 28, 2017, other than for Breach of Trust
(as defined in the Stock Option Agreement), (i) Employee will be entitled to
acceleration of the vesting of the 2015 RSU Grant as of the Separation Date, as
if Employee had remained employed through February 28, 2017 and (b) Employee
shall continue to receive his regular base salary as severance, less required
deductions and withholdings, paid on the Company's standard payroll dates
through February 28, 2017.

 

Transition Agreement and Release

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(d)        Except as explicitly provided in this Agreement, Employee
acknowledges and agrees that he is not entitled to any additional severance
payments, equity acceleration, advance notice of termination or other benefits
in connection with Employee’s separation from service pursuant to the Employment
Offer or otherwise.

 

3.       Reaffirmation. Employee and the Company agree to execute the attached
Supplemental Release on or within twenty-one (21) days after the Separation Date
in order to extend and reaffirm the promises and covenants made by them in this
Agreement, including but not limited to the mutual general release of all
claims. If Employee fails to execute the Supplemental Release on or within
twenty-one (21) days after the Separation Date, or effectively revokes the
acceptance of the Supplemental Release, Employee shall not receive the
Additional Consideration.

 

4.       Payment of Salary, Benefits Prior to Effective Date. Employee
acknowledges and represents that the Company has paid all salary, wages,
bonuses, accrued vacation, paid time off, housing allowances, relocation costs,
interest, severance, stock, stock options, outplacement costs, fees, commissions
and any and all other benefits and compensation due to Employee as of the
Effective Date.

 

5.       Separation from Employment. Employee acknowledges and agrees that
employment with or service to the Company in any capacity will end on the
Separation Date. During the Transition Period, Employee shall continue to
receive his current base salary and benefits provided in Section 2(a) above up
to and including the Separation Date. Employee claims and shall claim no further
right to employment by the Company beyond the Separation Date. Further, the
Parties understand and acknowledge that this Agreement and the Supplemental
Release are intended to represent Employee’s sole entitlement after the
Effective Date to payments and benefits in connection with the termination of
employment.

 

6.       Confidentiality Agreement. Employee shall continue to comply with the
terms and conditions of the Confidentiality Agreement, and maintain the
confidentiality of all of the Company’s confidential and proprietary
information. Employee shall also return to the Company all of the Company’s
property, including all confidential and proprietary information, and all
documents and information that Employee obtained in connection with his
employment with the Company, on or before the Separation Date.

 

7.       Release of Claims. Employee agrees that the consideration described in
this Agreement represents settlement in full of all outstanding obligations owed
to Employee by the Company and its current and former officers, directors,
employees, agents, investors, attorneys, shareholders, administrators,
affiliates, benefit plans, plan administrators, and subsidiaries, parent,
subsidiaries, and predecessor and successor corporations and assigns
(collectively, the “Releasees”). Employee, on his own behalf and on behalf of
his respective heirs, family members, executors, agents, and assigns, hereby and
forever releases the Releasees from, and agrees not to sue concerning, or in any
manner to institute, prosecute, or pursue, any claim, complaint, charge, duty,
obligation, or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that Employee may possess
against any of the Releasees arising from any omissions, acts, facts, or damages
that have occurred up until and including the Effective Date, including, without
limitation:

 

(a)        any and all claims relating to or arising from Employee’s employment
relationship with the Company and the termination of that relationship;

 

Transition Agreement and Release

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(b)        any and all claims relating to, or arising from, Employee’s rights
with respect to any restricted stock units of the Company, including, without
limitation, any claims for fraud, misrepresentation, breach of fiduciary duty,
breach of duty under applicable state corporate law, and securities fraud under
any state or federal law;

 

(c)        any and all claims for wrongful discharge of employment; termination
in violation of public policy; discrimination; harassment; retaliation; breach
of contract, both express and implied; breach of covenant of good faith and fair
dealing, both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; fraud; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; conversion; and disability benefits;

 

(d)        any and all claims for violation of any federal, state or municipal
statute, including, but not limited to, title VII of the Civil Rights Act of
1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973, Age
Discrimination in Employment Act of 1967; the Americans with Disabilities Act of
1990; the Fair Labor Standards Act, except as prohibited by law; the Fair Credit
Reporting Act; the Employee Retirement Income Security Act of 1974; the Family
and Medical Leave Act, except as prohibited by law; the Worker Adjustment and
Retraining Notification Act; the Older Workers Benefit Protection Act; the
Sarbanes-Oxley Act of 2002; and any of the laws of the State of Washington, and
any other state or local law or ordinance relating to employment discrimination;

 

(e)        any and all claims for violation of the federal or any state
constitution;

 

(f)        any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination;

 

(g)        any claim for any loss, cost, damage, or expense arising out of any
dispute over the non-withholding or other tax treatment of any of the proceeds
received by Employee as a result of the Agreement; and

 

(h)        any and all claims for attorneys’ fees and costs.

 

Employee agrees that the release set forth in this section shall be and remain
in effect in all respects as a complete general release as to the matters
released. This release does not extend to any obligations incurred under the
Agreement. This Agreement does not release claims that cannot be released as a
matter of law.

 

8.       Acknowledgment of Waiver of Claims under ADEA. Employee understands and
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 (“ADEA”), and that this waiver and
release is knowing and voluntary. Employee understands and agrees that this
waiver and release does not apply to any rights or claims that may arise under
the ADEA after the Separation Date. Employee understands and acknowledges that
the consideration given for this waiver and release is in addition to anything
of value to which Employee was already entitled. Employee further understands
and acknowledges that he has been advised by this writing that: (a) he should
consult with an attorney prior to executing this Agreement; (b) he has twenty
one (21) days within which to consider this Agreement, (c) he has seven (7) days
following the execution of this Agreement to revoke this Agreement (the
“Revocation Period”) and any revocation must be in writing and must be received
by the company during the Revocation Period; and (d) this Agreement shall not be
effective until the Revocation Period has expired. Nothing in the Agreement
prevents or precludes Employee from challenging or seeking a determination in
good faith of the validity of this waiver under the ADEA, nor does it impose any
condition precedent, penalties, or costs for doing so, unless specifically
authorized by federal law. In the event Employee signs this Agreement and
returns it to the Company in less than the periods identified above, Employee
hereby acknowledges that he has freely and voluntarily chosen to waive the time
period allotted for considering the Agreement.

 

Transition Agreement and Release

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9.        No Pending or Future Lawsuits. Employee and Company represents that
he/they have not filed or otherwise pursued any charges, complaints or claims of
any nature and there are no lawsuits, claims, or actions pending in his name, or
on behalf of any other person or entity, against the Employee or Company or any
of the other Releasees. Employee also represents that, except to the extent
permitted by law, he does not intend and will not bring any claims on his own
behalf or on behalf of any other person or entity against the Company or any of
the other Releasees.

 

10.       No Cooperation. Employee further agrees that he will not knowingly
encourage, counsel, or assist any attorneys or their clients in the presentation
or prosecution of any disputes, differences, grievances. claims. charges, or
complaints by any third party against any of the Releasees. unless under a
subpoena or other court order to do so or as related directly to the ADEA waiver
in this Agreement. Employee agrees both to immediately notify the Company upon
receipt of any such subpoena or court order. and to furnish. within three (3)
business days of its receipt, a copy of such subpoena or other court order. If
approached by anyone for counsel or assistance in the presentation or
prosecution of any disputes. differences, grievances, claims, charges, or
complaints against any of the Releasees. Employee shall state no more than that
he cannot provide counsel or assistance.

 

11.       Non-Disparagement. Employee and the Company (for this purpose, the
Company is deemed to be the officers and individual members of the Board of
Directors) each agree to refrain from any disparagement, defamation, libel, or
slander of the other (and in the case of Employee, any of the Releasees).

 

12.       Breach. Employee acknowledges and agrees that any material breach of
this Agreement, unless such breach constitutes a legal action by Employee
challenging or seeking a determination in good faith of the validity of the
waiver herein under the ADEA. or of any provision of the Confidentiality
Agreement, shall entitle the Company to injunctive relief without a bond (or the
lowest bond permissible under applicable law), other appropriate remedies, and
damages.

 

13.       Damages for Breach. Employee acknowledges that the obligations of the
non-disparagement, confidentiality, and cooperation sections set forth above are
mutual as described by their terms, and in any event are material parts of the
consideration and inducement to the Company to provide any of the consideration
set forth herein. Further, Employee agrees that the harm to the Company from any
breach of the obligations of those provisions may be wholly or partially
irreparable, and Employee agrees that such obligations may be enforced by
injunctive relief and other appropriate remedies, as well as by damages.

 

14.       Indemnification. Subject to applicable law, and expiration of any
applicable statute of limitations, if any, Employee will be provided
indemnification to the maximum extent permitted by a separate indemnification
agreement, if any ("Indemnification Agreement"), the Israeli Companies Law and
Parent's Memorandum of Association, as amended, and Amended Articles of
Association and the governing documents of the Company, including coverage, if
applicable, under any directors and officers insurance policies, with such
indemnification determined by the Board or any of its committees in good faith
based on principles consistently applied (subject to such limited exceptions as
the Board may approve in cases of hardship) and on terms no less favorable than
those provided to any other Company executive officer or director.

 

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15.       Costs. The Parties shall each bear their own costs, attorneys' fees,
and other fees incurred in connection with the preparation of this Agreement
except as set forth in the Agreement

 

16.       Section Headings. Section headings in this Agreement are included for
convenience of reference only and shall not be considered a part of this
Agreement for any other purpose.

 

17.       Severability. The provisions of this Agreement are severable, and if
any part is found to be unlawful or unenforceable, the other provisions of this
Agreement shall remain fully valid and enforceable to the maximum extent
consistent with applicable law. Any court or arbitrator having jurisdiction over
such matters shall have the power to reform such unlawful or unenforceable
provision to the extent necessary for such provision to be enforceable to the
fullest extent under applicable law.

 

18.       Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by the laws of the State of Washington, without regard to its choice of
law provisions. The parties hereby irrevocably and unconditionally agree to
submit any legal action or proceeding relating to the subject matter of this
Agreement to the non-exclusive general jurisdiction of the courts of the State
of Washington located in King County and the courts of the United States located
in the Western District of Washington and, in any such action or proceeding,
consent to jurisdiction in such courts and waive any objection to the venue in
such court.

 

19.       Tax Consequences. The Company makes no representations or warranties
with respect to the tax consequences of the payment of any sums to Employee
under the terms of this Agreement. Employee agrees and understands that he is
responsible for payment of any local, grate and/or federal taxes on the sums
paid hereunder by the Company and any penalties or assessments thereon. Employee
further agrees to indemnify and hold the Company harmless from any claims,
demands, deficiencies, penalties, assessments, executions, judgments, or
recoveries by any government agency against the Company for any amounts claimed
due on account of Employee's failure to pay federal or state taxes or damages
sustained by the Company by reason of any such claims, including reasonable
attorney fees.

 

20.       No Admission of Liability. The Parties understand and acknowledge that
this Agreement constitutes a compromise and settlement of disputed claims. No
action taken by the Parties, previously or in connection with this Agreement,
shall be construed to be: (a) an admission of the truth or falsity of any claims
made, or (b) an admission by either party of any fault or liability whatsoever
to the other party or to any third party.

 

21.       No Oral Modification. Any modification or amendment of this Agreement,
or additional obligation assumed try either party in connection with this
Agreement, shall be effective only if placed in writing and signed by both
Parties or their authorized representatives.

 

22.       Attorney Fees. In the event that either Party brings an action to
enforce or effect its rights under this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including the costs of mediation,
arbitration, litigation, court fees, plus reasonable attorneys’ fees, incurred
in connection with such an action.

 

23.       Entire Agreement. This Agreement represents the entire agreement and
understanding between the Company and Employee concerning the subject matter of
this Agreement and Employee's employment with and separation from the Company
and the events leading thereto and associated therewith, and supersedes and
replaces any and all prior agreements and understandings concerning the subject
matter of this Agreement and Employee's relationship with the Company, with the
exception of the Confidentiality Agreement and any specific references to the
Employment Offer, Stock Option Plan and Indemnification Agreement.

 

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24.       Knowing and Voluntary Agreement. Employee represents that he has had
an opportunity to consult with an attorney, and has carefully read and
understands the scope and effect of the provisions of this Agreement. Employee
has not relied upon any representations or statements made by the Company that
are not specifically set forth in this Agreement. Employee understands and
agrees that he executed this Agreement voluntarily, without any duress or undue
influence on the part or behalf of the Company or any third party, with the full
intent of releasing all of his claims against the Company and any of the other
Releasees. Employee acknowledges that:

 

(a)        he has read this Agreement;

 

(b)        he has been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of his own choice or has elected
not to retain legal counsel;

 

(c)        he has been given twenty-one (21) days within which to consider this
Agreement and understands he may elect to execute prior to twenty-one (21) days:
and

 

(d)        he understands the terms and consequences of this Agreement and of
the releases it contains and he is fully aware of the legal and binding effect
of this Agreement.

 

If this Agreement is acceptable to Employee, please sign below within twenty-one
(21) days of receipt of this Agreement. If Employee does not sign this Agreement
and return it to the Company within the aforementioned timeframe, the Company's
offer to provide the consideration herein will expire.

 

PLEASE READ CAREFULLY. THIS IS A VOLUNTARY RELEASE THAT INCLUDES A RELEASE OF
ALL KNOWN AND UNKNOWN CLAIMS.

 

MODERN SYSTEMS CORPORATION   MATTHEW BELL           /s/ SCOTT MILLER   /s/
Matthew Bell By: SCOTT MILLER   Matthew Bell Its: CHAIRMAN       Date: 20 JUNE
2016   Date: 17 June 2016

 

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EXHIBIT A

 

SUPPLEMENT TO TRANSITION AGREEMENT AND RELEASE

 

This Supplement to Transition Agreement and Release (this "Supplemental Release)
is made by and between Matthew Bell, an individual ("Employee”) and Modern
Systems Corporation, a Delaware corporation (formerly known as BluePhoenix
Solutions USA, Inc.), a wholly-owned subsidiary of ModSys International Ltd.
(the "Company" and together with Employee collectively referred to as the
"Parties" or individually referred to as a “Party") and amends the Transition
Agreement and Release ("Agreement") by extending the promises and agreements of
each and every section and subsection, except Section 8 and its subparts, of the
Agreement through the Separation Date. Terms not defined in this Supplemental
Release have the meaning ascribed in the Agreement.

 

1.        Acknowledgment of Waiver of Claims under ADEA. This Supplemental
Release is intended to satisfy the Age Discrimination in Employment Act of 1967
("ADEA"). Employee is advised to consult with an attorney before executing this
Supplemental Release.

 

(a)        Acknowledgement/Time to Consider. Employee acknowledges and agrees
that (a) he has read and understands the terms of this Supplemental Release; (b)
he has been advised to consult with an attorney; (c) that he has obtained and
considered such legal counsel as he deems necessary; (d) that he has been given
twenty-one (21) days to consider whether or not to sign this Supplemental
Release (although Employee may elect not to use the full 21-day period at his
option); and (e) that by signing this Supplemental Release, Employee
acknowledges that he does so freely, knowingly, and voluntarily.

 

(b)        Revocation/Effective Date. This Supplemental Release shall not become
effective or enforceable until the eighth day after Employee signs this
Supplemental Release. In other words. Employee may revoke his acceptance of this
Supplemental Release within seven (7) days after he signs it. Employee's
revocation must be in writing and received by Scott Miller, by 5:00 p.m. Pacific
Time (with a copy to Adam Goldblatt, Company counsel at adam@agoldblatt.com). on
or before the seventh day after it is signed to be effective. If Employee does
not revoke his acceptance on or before that date, his acceptance of this
Supplemental Release shall become binding and enforceable on the eighth day.

 

(c)        Preserved Rights of Employee. This Supplemental Release does not
waive or release any rights or claims that Employee may have under the ADEA that
arise after the execution of this Supplemental Release. In addition. this
Supplemental Release does not prohibit Employee from seeking relief in the event
of a breach of the Agreement, or from challenging the validity of waiver and
release of claims under the ADEA.

 

The parties to this Supplemental Release have read the foregoing Supplemental
Release and fully understand each and every provision contained herein.
Wherefore, the parties have FREELY AND VOLUNTARILY executed this SUPPLEMENTAL
RELEASE on the dates shown below.

 

MODERN SYSTEMS CORPORATION   Matthew Bell, an individual           /s/ SCOTT
MILLER   /s/ Matthew Bell By: SCOTT MILLER   Matthew Bell Its: CHAIRMAN      
Date: 20 JUNE 2016   Date: 17 June 2016