Exhibit 10.1
 
MUTUAL SEPARATION AGREEMENT

THIS MUTUAL SEPARATION AGREEMENT (this “Agreement”), is entered into by and
among James Caparro (hereinafter, the “Executive”), Entertainment Distribution
Company, Inc. (formerly, Glenayre Technologies, Inc.), a Delaware corporation
(the “Company”), Glenayre Electronics, Inc., a Delaware corporation and
subsidiary of the Company (“GEI”), and Entertainment Distribution Company, LLC,
a Delaware limited liability company and subsidiary of the Company (“LLC”).

WHEREAS, GEI, LLC and Executive are parties to that certain Letter Agreement
dated May 9, 2005 regarding Executive’s employment by LLC, as amended by that
certain Letter Agreement dated November 6, 2006 among the Company, GEI and
Executive regarding Executive’s employment by the Company and GEI (as so
amended, the “Employment Agreement”);

WHEREAS, the Executive is currently employed as (i) President and Chief
Executive Officer of the Company and serves as a Director on the Company’s board
of directors (the “Board”), (ii) President and Chief Executive Officer of GEI,
(iii) President and Chief Executive Officer of LLC and serves as a Director on
LLC’s board of directors (the “LLC Board”), and (iv) serves as a director of
Entertainment Distribution Holding GMBH and/or Entertainment Distribution
Company GMBH (collectively, “GMBH”);

WHEREAS, the Company, GEI and LLC  together with Executive have mutually agreed
that it is in their respective best interests to bring the employment of the
Executive to an end, in accordance with the term and conditions of this
Agreement; and

WHEREAS, the parties wish to set forth their mutual understanding concerning
Executive’s (i) separation from employment with each of the Company, GEI and the
LLC and (ii) continuing role as a non-executive member of the LLC
Board,  including with respect to the continuation of compensation, benefits and
the other matters set forth herein.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

1.  Effective Date.  The Executive’s last day of employment as President and
Chief Executive Officer of each of the Company, GEI and LLC shall be November 5,
2007 (the “Effective Date”).  On the Effective Date, Executive shall also cease
to serve as a member of the Board and as a director of GMBH and in any other
capacity with the Company’s subsidiaries and affiliates, except as set forth in
Section 2 of this Agreement.

2.  Role at LLC.  From and after the Effective Date and until termination of
this Agreement pursuant to Section 7 hereof, Executive shall continue on the LLC
Board serving as non-executive Chairman.  During the term hereof, Executive
shall devote his business attention and ability to the performance of his duties
as non-executive Chairman, and shall not seek or obtain any other employment or
perform any services for or on behalf of any other person or entity; provided
that Executive may continue to serve on the Board of Directors of The TJ Martel
Foundation.

3.  Consideration.  In consideration of the Executive’s agreement to terminate
his employment with the Company, GEI, LLC and their affiliates and in
consideration of his continuing role as non-executive Chairman of the LLC Board,
the Executive shall receive the payments and benefits described in this Section
3.  The Executive acknowledges and agrees that the payment and benefits provided
in this Section 3 are in full satisfaction of any amounts provided for in the
Employment
 
 
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Agreement, and are conditioned upon the Executive’s execution and non-revocation
of this Agreement.  The Executive acknowledges and agrees that he is not
entitled to, and will not receive, any wage, commission, bonus, vacation, sick,
personal, severance, expense, or other reimbursement or other payments or
benefits from the Company, LLC or any of their affiliates, other than those
provided in this Section 3.  This Agreement supersedes and replaces all
provisions of the Employment Agreement relating to compensation, benefits and
severance.

a.           Cash Compensation.  In consideration for execution of this
Agreement and Executive’s continued service as non-executive Chairman of the LLC
Board, the Company shall make to Executive (i) eight semi-monthly payments of
$31,250 commencing on the regular payroll date on or about November 15, 2007 and
continuing on the same and last payroll day of November, 2007 and each of the
succeeding and ensuing three calendar months thereafter, (ii) a single payment
of $62,500 on or before March 15, 2008, and (iii) a lump sum payment of $687,500
on the first payroll payment date in January 2008 (collectively the “Installment
Payments”).  In addition, on or before November 15, 2007, the Company shall make
a final payment of accrued salary through November 2, 2007, accrued but unused
vacation up to $40,000 and any related 401(k) matching contribution to Executive
accrued and owed to Executive in connection with his employment for any period
prior to, through and including November 2, 2007.  Further, within ten days
after Executive’s submission of supporting evidence of the same, the Company
shall reimburse Executive for all expenses incurred by Executive in connection
with his employment for any period prior to, through and including the Effective
Date, so long as such expenses conform to the Company’s reimbursement policy
described in Section 6 below.  In addition to the foregoing, Executive shall
remain entitled to receive all accrued and vested benefits owed to Executive
under each of the Company's 401(k) plan and deferred compensation plan, which
benefits shall remain payable in accordance with the terms of the governing plan
under which such benefits are provided.

b.           Acceleration of Payments.  In the event that there is a sale or
disposition of all or substantially all of the assets of the Company or LLC, or
a sale or disposition of a majority of the outstanding equity of LLC, in either
case prior to March 15, 2008, within two (2) weeks following the closing of any
such event, the Company shall pay to Executive all Installment Payments
remaining to be paid under Section 3a. above.

c.           Health Insurance Program.  Notwithstanding anything to the contrary
contained in any of the Company’s health and welfare plans or other health
insurance programs (collectively, the “Health Insurance Program”), following the
Effective Date through October 31, 2008, the Executive and his dependent family
members currently participating in such program shall continue to participate
pursuant to elections made prior to the Effective Date in the Company’s Health
Insurance Program as though the Executive was employed by the Company, at the
Company’s expense, or if such continued participation is not permitted by the
Health Insurance Program, the Company shall pay the cost of Executive’s
continued participation in such program pursuant the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) through October 31, 2008.  Subject to the
foregoing, it is the parties’ intent that Executive’s right to elect to continue
coverage for himself and his dependent family members under the Health Insurance
Program pursuant to COBRA shall occur, commence and continue as measured from
and after March 15, 2008.

4.  Withholding Taxes.  The Company reserves the right to withhold applicable
taxes from any amounts paid pursuant to this Agreement to the extent required by
law.  The Executive shall be responsible for any and all tax liability imposed
on amounts paid hereunder.
 
 
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5.  Provision of Office Space and Equipment.  During the term of this Agreement,
the Executive shall be provided with office space in the Company’s New York
office and office equipment, including, without limitation, a laptop, Blackberry
and email access, in each case, sufficient to enable the Executive to perform
his duties as non-executive Chairman of the LLC Board.  Such office space shall
be provided for Executive’s use, although Executive may choose to work from an
alternative location so long as Executive makes himself available to the Company
as required to satisfy his obligations under Section 2 hereof.

6.  Expense Reimbursement.  During the term of this Agreement, LLC shall
reimburse Executive for entertainment expenses incurred by him in his capacity
as non-executive Chairman so long as such expenses are incurred and approved in
accordance with the Company’s expense reimbursement policy, as modified on
September 2, 2007 and any individual expense exceeding $1,000 has been
pre-approved by the Chief Executive Officer of the Company.

7.  Term.  This Agreement and Executive’s service as non-executive Chairman of
the LLC Board shall terminate upon the earlier to occur of (i) the five month
anniversary of the date of this Agreement, or (ii) a sale or disposition
described in Section 3b. of this Agreement, subject to satisfaction of any
payments required by Sections 3 of this Agreement.

8.  Representations and Promises:   The Executive acknowledges and agrees that:

a.           This Agreement is the entire agreement relating to Executive’s
service with the Company, GEI, and LLC and any claims or future rights that
Executive might have with respect to the Company, GEL and LLC, except as
expressly set forth or referenced herein.  This Agreement may be amended only by
a written agreement that is signed by all of the parties hereto.  This Agreement
is a legally admissible, enforceable agreement governed by Federal law and the
laws of New York.

b.           When Executive decided to sign this Agreement, Executive was not
relying on any representations that were not in this Agreement.

c.           Executive has not suffered any job-related wrongs or injuries, such
as any type of discrimination, for which Executive might still be entitled to
compensation or relief in the future.  Executive has properly reported all hours
that Executive has worked and Executive has been paid all wages, overtime,
commissions, compensation, benefits, and other amounts that the Company or any
LLC should have paid Executive in the past.

d.           If the Company, LLC or Executive successfully asserts that any
provision in this Agreement is void, the rest of the Agreement shall remain
valid and enforceable unless the other party to this Agreement elects to cancel
it.  If this Agreement is cancelled by Executive, Executive will repay the
consideration and other benefits Executive received for signing it.

e.           If Executive initially did not think any representation Executive
is making in this Agreement was true or if Executive initially was uncomfortable
making it, Executive has resolved all of his doubts and concerns before signing
this Agreement.  Executive has carefully read this Agreement, fully understands
what it means, is entering into it knowingly and voluntarily, and all of
Executive’s representations in it are true.  The Company would not have given
Executive the consideration or other benefits Executive is getting in exchange
for this Agreement but for Executive’s representations and promises which
Executive is making by signing it.
 
 
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f.           Executive has been given sufficient time to review this Agreement
and has read and understand the terms of this Agreement and has voluntarily
accepted these terms.  Executive has consulted with an attorney prior to
executing this Agreement.

9.  Return of Company Property.  On or before the termination date set forth
pursuant to Section 7 hereof and except as otherwise provided under Section 3(d)
of this Agreement, the Executive will return to the Company (i) all files,
documents, records, and copies of the foregoing (whether in hard or electronic
form), (ii) any other any real, intellectual and/or other property belonging to
the Company or LLC or materials containing the Company’s or LLC’s confidential
information in the Executive’s possession or control and (iii) any other Company
or LLC property requested by the Company.

10.  Communication.  Executive agrees to refrain from making any disparaging,
derogatory or negative statements about the Company, GEI, LLC or any of their
affiliates, or any of their past or present officers, directors, agents or
employees.  The Company, GEI and LLC agree to refrain from making and agree to
cause their present officers, directors, agents or employees to refrain from
making any disparaging, derogatory or negative statements about Executive.  In
addition, the Company shall provide Executive with a copy of any public
announcement, disclosure, statement or other communication (including the Form
8-K to be filed by the Company upon execution of this Agreement) concerning
Executive’s prior relationship with or separation from service from any one or
more of Company, GEI, LLC or GMBH, prior to its release or filing with the
Securities and Exchange Commission.

11.  Confidential Information.  Executive acknowledges that, in connection with
his employment, Executive has acquired or had access to non-public information
that the Company and LLC treat as proprietary or confidential, including,
without limitation, information relating to the Company’s and LLC’s business,
operations, assets, investments and strategic plans. Executive agrees to
maintain the confidentiality of such information and not disclose or make such
information available to any third party, without the prior written consent of
the Company.  All such confidential information shall continue to be subject to
the restrictions and exceptions set forth in Section 4 of the Employment
Agreement, which section shall continue in full force and effect in accordance
with the terms thereof following execution of this Agreement.

12.  Ownership Interests in LLC.  The parties acknowledge that Executive owns
certain “Class B Units,” “Tier One Profits Interests,” “Tier Two Profits
Interests” and “Tier Three Profits Interests” (each as identified or defined
under the Employment Agreement (including in particular Section 3(j) thereof)
and the LLC Agreement and all being collectively referred to herein as the
“Subject LLC Interests”) in the LLC which were previously or are currently
acquired, held or issued in Executive’s name.  The parties acknowledged that
Executive has met the conditions set forth in Section 3(j) of the Employment
Agreement with respect to the vesting of the Subject LLC Interests referenced in
such Section 3(j).  Nothing in this Agreement shall impair, amend, alter or in
any way affect Executive’s continuing ownership of the Subject LLC Interests or
Executive’s continuing rights under the LLC Agreement, the provisions of that
certain letter agreement dated May 31, 2005 from GEI pertaining to such Subject
LLC Interests, any provisions of the Employment Agreement relating to such
Subject LLC Interests and any other written agreements relating thereto.

13.  Continuation of Certain Terms of Employment Agreement.  The parties
acknowledge that the confidential information, non-competition and
non-solicitation and ownership of intellectual property provisions set forth in
Sections 4, 5 and 6 of the Employment Agreement shall continue in full force and
effect in accordance with the terms thereof.
 
 
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14.  Effect on other Documents and Agreements.  Nothing in this Agreement shall
impair, alter or in any way affect either (i) the provisions of any one or more
of that certain Limited Liability Company Agreement of Entertainment
Distribution Company, LLC dated effective March 17, 2005 or the articles of
formation, by-laws or other governing constituent documents for any one or more
of the Company, GEI, LLC, or GMBH (collectively the "Companies") including,
without limit, any provisions extending any rights of indemnification or defense
to Executive in his capacity as an employee, officer, director, representative,
agent or fiduciary of any of the Companies or (ii) Executive's right to receive
coverage under, and in accordance with the terms of, the liability insurance
policies, if any, currently maintained by any one or more of the Companies for
the benefit of their past or present employees, officers, directors,
representatives, agents or fiduciaries, as such policies shall be amended,
modified or otherwise altered by the Companies from time to time.

15.  Remedies for Early Termination.  If the Company terminates Executive’s
position as non-executive Chairman on the LLC Board prior to the termination of
this Agreement pursuant to Section 7 of this Agreement, the Company shall
promptly make all remaining payments required to be made to Executive pursuant
to Section 3 of this Agreement, or if necessary to continue to qualify for
exclusion from the provisions of Rule 409A of the Internal Revenue Code, shall
continue to make such payments on the schedule set forth in Section 3 of this
Agreement.  If Executive terminates his position as non-executive Chairman on
the LLC Board prior to the termination of this Agreement pursuant to Section 7
of this Agreement, the Company shall have no further obligation to make any
payments to Executive pursuant to Section 3 of this Agreement from the date of
such termination.

16.  Acknowledgement.  The Executive acknowledges that he has read this
Agreement, fully understands its content and effect, and without duress or
coercion, knowingly and voluntarily assents to its terms.

17.  Miscellaneous.  This Agreement shall be subject to and governed by the laws
of the State of New York.  This Agreement constitutes the entire agreement
between the parties and supersedes all previous communications between the
parties with respect to the subject matter of this Agreement.  This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.  No amendment to this Agreement
shall be binding upon either party unless in writing and signed by or on behalf
of such party.  This Agreement may be executed in counterparts, each of which
shall be binding on the parties and have the full legal effect of the original.

[Signatures contained on the following page.]
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have executed or caused to be executed
this Agreement on the respective dates specified below.
 
 

  /s/ James Caparro                                                           
JAMES CAPARRO                 Date:      November 5,
2007                                          

 
 

 
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COUNTERPART SIGNATURE PAGE
 
 
 

  ENTERTAINMENT DISTRIBUTION COMPANY, INC.                 By:           /s/
Clarke H. Bailey                           Name:      Clarke H.
Bailey                                
Title:        Chairman                                                 
Date:       November 5, 2007                          

    
 
 
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COUNTERPART SIGNATURE PAGE           
 
 
 

  GLENAYRE ELECTRONICS, INC.                 By:           /s/ Clarke H.
Bailey                           Name:      Clarke H.
Bailey                                
Title:        Chairman                                                 
Date:       November 5, 2007                          

                               
 
 
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COUNTERPART SIGNATURE PAGE           
 
 
 

  ENTERTAINMENT DISTRIBUTION COMPANY, LLC                 By:           /s/
Clarke H. Bailey                           Name:      Clarke H.
Bailey                                
Title:        Chairman                                                 
Date:       November 5, 2007                          

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