XXXXX X. XXXXXXX SEPARATION AGREEMENT
Exhibit 10
(iii) 38.
SEPARATION
AGREEMENT
This Separation Agreement (hereinafter the
“Agreement”) is entered into by Xxxxx X. Xxxxxxx (hereafter
“Xxxxxxx”), an individual, and The IT Group, Inc., a Delaware
corporation, and its subsidiaries and affiliates (collectively referred to
as the “Company”).
RECITALS
A. WHEREAS,
Xxxxxxx has been employed by the Company, has held the position of Sr.
Vice President of The IT Group, Inc. and IT Corporation, as well as serving
as an officer and director of other affiliates and subsidiaries of the
Company; and
B. WHEREAS,
Xxxxxxx and the Company wish to finally and forever resolve all matters
between them relative to Xxxxxxx’x employment and his entitlement to
severance pay and other additional forms of compensation and benefits, and
to provide for his resignation and the termination of the employment
relationship;
C. NOW, THEREFORE,
in consideration of the aforementioned recitals and the mutual covenants
and conditions set forth below and in full settlement of any and all claims
for allegedly lost compensation including, without limitation, all claims
for back pay, severance pay, accrued Paid Time Off, continuation of health
or other benefits or any other payment in the nature of compensation
allegedly attributable to Xxxxxxx’x employment by the Company, and any
and all other claims which were or could have been raised by either party
prior to the date of this Agreement, the sufficiency of which consideration
is hereby acknowledged, Xxxxxxx and the Company hereby agree as
follows:
AGREEMENT
1. Resignation and
Termination of Employment. Effective as of August
21, 1999 (the “Resignation Date”), Xxxxxxx resigns as an employee
and officer of the Company, knowing that he is irrevocably giving up
whatever rights he has, if any, to continued employment with the Company
after the Resignation Date. The Company accepts Xxxxxxx’x resignation,
and has informed Xxxxxxx prior to his execution of this Agreement that it
will not permit Xxxxxxx to withdraw his resignation. Xxxxxxx shall perform
no further duties for the Company after August 21, 1999 except such duties
as may arise under the terms of this Agreement.
2. Salary
Effective as of August 21, 1999, the Company will pay to
Xxxxxxx the rate of his annual salary, less payroll deductions for taxes, in
equal biweekly payments, until December 31, 1999 or the date that
this Agreement has been accepted and signed by Xxxxxxx and Company. All sums
paid biweekly after the Resignation Date shall be credited against the
Severance Pay described in Paragraph 3.
3. Severance Pay.
The Company shall pay to Xxxxxxx a xxxxxxxxx payment
of $340,000.00, less normal payroll deductions, in a lump sum, which shall
be payable seven (7) days’ after the signature and acceptance of this
Agreement by both Xxxxxxx and Company. This severance payment is in lieu of
and extinguishes all rights or claims to any other salary or severance
right, or to any other payment except as expressly provided herein. Xxxxxxx
agrees that he has been fully paid for any and all accrued and vested wages
and benefits to the date of resignation.
4. Paid Time Off
Xxxxxxx acknowledges that he has been paid all
accrued salary and Paid Time Off, less normal payroll deductions, through
the Resignation Date, except for the sum of $2,604.44 which shall be payable
to Xxxxxxx, less normal payroll deductions, with the Severance Pay provided
in Paragraph “3.” Paid Time Off benefits shall cease to accrue
after the Resignation Date.
5. Benefits
Xxxxxxx’x eligibility to participate in the Company
’s benefit programs, including but not limited to disability and life
insurance benefits, shall terminate effective August 21, 1999. The Company
shall arrange to provide a maximum of fifty (50) months of executive health
insurance coverage from the date of termination or until Xxxxxxx is employed
by a company or entity which offers health insurance coverage, or until
Xxxxxxx obtains any other health insurance coverage. Xxxxxxx will notify the
company when he becomes eligible for such health insurance coverage. In
order to qualify for this executive health insurance coverage, Xxxxxxx
agrees to be an “employee on call.” Xxxxxxx will be available to
provide services to the Company as requested by the Company anytime during
the initial thirty-two (32) month period or portion thereof. Xxxxxxx will be
paid for such services at his last salary rate, prorated over the time of
performance. Xxxxxxx will execute any necessary or appropriate documents to
establish his status as an employee on call. In regard to the last eighteen
(18) months of executive health insurance coverage, this coverage will be
provided pursuant to COBRA and Xxxxxxx will be responsible to pay the
premiums for such coverage. Xxxxxxx will also be provided any additional
benefits that are agreed upon between the Company and Xx. Xxxxxxx Xxxxx,
retroactive to the Resignation Date of August 21, 1999.
6. Expenses Related
to Seeking Employment. In further consideration
of the promises and releases contained herein, Company agrees to provide to
Xxxxxxx the sum of $25,000.00 on account of outplacement services, which sum
shall be payable seven (7) days’ after the execution and acceptance of
this Agreement by both Xxxxxxx and Company.
7. Retirement
Plans. Xxxxxxx shall cease to participate in
Company’s qualified and non-qualified retirement plans on August 21,
1999, in accordance with the terms of those plans. For purposes of the
Executive Stock Ownership and Executive Bonus Plans, it is acknowledged and
agreed that Xxxxxxx is considered as having retired. In lieu of any company
payments to the 401K plan or restoration plan in the year 2000, Company will
pay Xxxxxxx a lump sum of $8,000.00. Company will also pay Xxxxxxx the sum
of $2,060.00, which represents the matching funds that were credited to his
account at Fidelity after August 21, 1999, which will subsequently be
debited to his account.
8.
Bonuses.
(a) Management
Incentive Plan. Xxxxxxx acknowledges that he has
been paid all monies payable to him under the FY 1999 Management Incentive
Plan (MIP), in lieu of any other bonus or Incentive Awards. Xxxxxxx shall
not be entitled any incentive awards for any period of time after August 21,
1999.
(b) Executive Bonus
Plan. Xxxxxxx is entitled to one performance
bonus and one continuous service bonus, totaling $54,813.00. Such amount has
been applied to reduce the loan balance due under Paragraph 10(c) of this
Agreement, to the amount shown in such paragraph.
Xxxxxxx is entitled
to be paid a tax gross-up on such bonus, in the amount of $51,410.00. In
addition, Xxxxxxx shall be eligible for further performances bonuses through
August 21, 2000, if the Company’s stock price reaches the levels
established in the Plan.
9. Stock Rights and
Options As provided in Paragraph “7”
hereof, the parties acknowledge that for purposes of Xxxxxxx’x Stock
Options, he shall be recognized as having retired effective August 21,
1999:
(a) The parties
acknowledge that Xxxxxxx has received stock options of the Company which
were awarded to him on May 7, 1992, June 3, 1993, April 29, 1994, February
25, 1997, May 13, 1997, May 26, 1998 and February 23, 1999, which may be
exercised by Xxxxxxx in accordance with, and subject to, the terms of such
grants.
(b) The parties
acknowledge that Xxxxxxx has 2,500 shares of Restricted Stock. In
consideration for the promises and releases contained herein, the Company
agrees to lift the restrictions on these shares of stock.
(c) The parties
acknowledge that Xxxxxxx has received certain options pursuant to Company
’s November 17, 1998 Executive Stock Ownership Program. Such options,
whether vested or nonvested, shall expire or remain eligible for vesting in
accordance with the terms of the grants.
10. Loans:
The parties acknowledge that Xxxxxxx has received a
Relocation loan and two Stock Purchase Loans from Company:
(a) December 2, 1996
Stock Purchase Loan The balance of $100,000.00
owing to the Company by Xxxxxxx on the 1996 Stock Purchase Loan shall be
repaid to Company in accordance with the terms of that Loan Agreement.
Xxxxxxx hereby authorizes Company to withhold the balance owing to Company
from the Severance Payment provided for in Paragraph 3 of this
Agreement.
(b) Relocation
Loan No interest shall accrue on account of the
1998 Relocation Loan until August 21, 1999, after which interest shall be
paid on the unpaid principal at prime rate plus 1% per annum. The Principal
remaining due of Eighty Thousand and no/100 Dollars ($80,000.00) on this
Relocation Loan shall be repaid by Xxxxxxx in 8 annual installments of Ten
Thousand and no/100 Dollars, plus interest ($10,000.00), payable on or
before December 31st of each year, beginning on December 31, 1999. The
outstanding principal balance of this Loan shall become immediately due and
payable upon Xxxxxxx’x failure to make payment of any installment when
due. Xxxxxxx shall have the right to prepay at any time all or any portion
of the principal due under the Relocation Loan without penalty or premium.
Xxxxxxx agrees that the first Annual Installment in the amount of
$12,603.84, including interest through February 28, 2000, of such Relocation
Loan will be paid within seven (7) days’ after signing this
Agreement.
(c) November 17,
1998 Executive Stock Ownership Program Loan The
balance owing to the Company by Xxxxxxx on the Executive Stock Ownership
Loan shall be payable by Xxxxxxx on the Resignation Date, in accordance with
the terms of that loan and the Executive Stock Ownership Program. This Loan
is due thirteen (13) months after termination of employment,
i.e.,
September 19, 2000.
The amount due will be $107,524.00, and Xxxxxxx agrees to pay that amount
due on that date. Xxxxxxx may pay the balance due earlier than September 19,
2000, and his total payment will be reduced by the amount of the interest
that would accrue between the early payment date and September 19,
2000.
11. Deferred
Compensation Xxxxxxx shall be entitled to receive
all sums vested and payable to him under the Company Deferred Compensation
Plan and the Company Restoration Plan, pursuant to Xxxxxxx’x elections
and the terms of those benefit plans.
12. Car
Allowance. No car allowance shall be granted by
Company to Xxxxxxx after August 21, 1999.
13. Other
Expenses Xxxxxxx agrees to reimburse Company for
all personal expenses charged to the Company, and Company agrees to
reimburse Xxxxxxx for any reasonable expenses incurred by Company at Company
’s request, in accordance with Company policy.
14. Sole
Entitlement. Xxxxxxx agrees that his sole
entitlement to compensation, payments of any kind, monetary and/or
nonmonetary benefits and/or perquisites with respect to his employment with,
his services rendered to, and all other matters between Xxxxxxx and the
Company, is as expressly set forth in this Agreement.
Xxxxxxx and the Company expressly agree that
the Employment Agreement dated November 20, 1996, between Xxxxxxx and the
Company is hereby terminated and is of no force and effect whatsoever. Any
provisions of such Employment Agreement, including but not limited to
Paragraphs 5, 6 and Paragraph 17 thereof, which are or may be claimed to be
inconsistent with this termination or Xxxxxxx’x resignation, are hereby
waived by both parties.
15. Releases by
Xxxxxxx. Xxxxxxx does hereby and forever release
and discharge the Company and the past and present parent, subsidiary and
affiliated corporations of the Company as well as the successors,
shareholders, officers and directors of corporate shareholders, officers,
directors, heirs, predecessors, assigns, agents, employees, attorneys and
representatives of each of them, past or present, from any and all cause or
causes of action, actions, judgments, liens, indebtedness, damage, losses,
claims, liabilities, and demands of whatsoever kind or character, known or
unknown, suspected to exist or not suspected to exist, anticipated or not
anticipated, whether or not heretofore brought before any state or federal
court or before any state or federal agency or other governmental entity,
whether statutory or common law, Including without limitation on the
generality of the foregoing, any and all claims, demands or causes of action
attributable to, connected with, or incidental to the employment of Xxxxxxx
by the Company, the separation of that employment and any dealings between
the parties concerning Xxxxxxx’x employment or any other matter
existing prior to the date of execution of this Agreement, excepting only
those obligations to be performed hereunder. This release is intended to
apply to any claims arising from federal, state or local laws which prohibit
discrimination on the basis of race, national origin, sex, religion, age,
marital status, pregnancy, disability, disability, ancestry, sexual
orientation, family or personal leave or any other form of discrimination,
or to laws such as workers’ compensation laws, which provide rights and
remedies for injuries sustained in the workplace or any common law claims of
any kind, including, but not limited
to, breach of
privacy, misrepresentation, defamation, wrongful termination, tortious
infliction of emotional distress, loss of consortium and breach of fiduciary
duty, violation of public policy and any other common law claim of any kind
whatever, any claims for severance pay, sick leave, family leave, vacation,
life insurance, bonuses (including, but not limited to, bonuses payable
under the FY 1999 Management Incentive Plan), health insurance, disability
or medical insurance or any other fringe benefit or compensation, and all
rights and claims arising under the Employee Retirement Income Security Act
of 1974 (“ERISA”), or pertaining to ERISA regulated
benefits.
16. Continuing
Fiduciary Obligations and Unfair Competition.
(a) Xxxxxxx
acknowledges that he is obligated by contract and by operation of law to
maintain the confidentiality of the Company’s trade secrets and other
confidential information (i.e., information designated or commonly known as
confidential) not publicly known, and covenants and agrees that he shall not
use or divulge, disclose, or communicate to any other person, firm, or
corporation, any of the Company’s trade secrets or confidential
information except as disclosure shall be compelled by judicial process.
Nothing contained in this paragraph is intended to preclude Xxxxxxx from
working for a competitor or from using non-trade secrets and/or
non-confidential information learned by him in the course of his employment
with the Company.
(b) Xxxxxxx agrees that
he shall not, for a period of one year from August 21, 1999, directly or
indirectly, by or for himself, or as the agent of another, or through others
as an agent, directly (i) recruit, solicit or induce, or attempt to induce
any officer or employee (other than employees engaged in secretarial
functions) of Company or any of its affiliates, to leave the Company’s
employ or otherwise interfere with the employment relationship between any
such person and the Company or any of its affiliates or (ii) hire any such
person recruited in violation of (i) immediately above. Nothing herein shall
preclude Xxxxxxx or any other person, firm or corporation which whom he is
associated, from hiring any officer or employee of Company or any of its
affiliates, if such officer or employee elects to apply for such employment
of his or her own volition.
(c) Xxxxxxx agrees that
he has delivered to Company all correspondence, drawings, manuals, letters,
notes, notebooks, reports, programs, plans, proposals, financial documents,
or any other documents concerning the Company’s customers, business
plans, marketing strategies, products or processes which are Company
property, or which are non-public or which contain proprietary information
or trade secrets.
17. Prohibition
Against Defamation and Willful Disparagement. The
Company and Xxxxxxx agree that they will not orally or in writing defame,
criticize, or willfully disparage, or in any manner undermine the reputation
of the other, or in the case of the Company, any subsidiary or affiliated
corporation of the company, the Company itself, or any employee, officer or
director of the Company or any subsidiary or affiliate of the Company,
except as required by compulsion of law to truthfully testify. Company
agrees to provide to Xxxxxxx a letter of reference, in the form attached
hereto. It is the intention of the parties that any inquiries from potential
employers of Xxxxxxx as to Xxxxxxx’x job performance, his interpersonal
and other management skills and the reason for his departure from employment
at the Company be responded to solely by the Human Resources Department of
Company in accordance with Company policies. In any such communication to
a
prospective employer
of Xxxxxxx, the reason for Xxxxxxx’x departure shall be given as a
consolidation of management functions.
18. Cooperation.
Xxxxxxx agrees to cooperate with the company in
connection with any future or currently pending litigation, including
without limitation, by making himself available to testify in actions as
reasonably requested by the Company. In the event that Xxxxxxx is required
to spend a significant amount of time in any such activities, he shall be
compensated at an hourly rate of $250 per hour, except that Xxxxxxx shall
not receive such compensation in any case or matter in which Xxxxxxx is
personally named as a defendant. In the event Xxxxxxx is named as a
defendant in any litigation or other proceeding involving the Company where
Xxxxxxx is required to defend himself with respect to events which relate to
or occurred during his employment with the Company, to the extent that
Xxxxxxx is not otherwise covered by any insurance policy maintained by the
Company, the Company shall be responsible for providing a defense to, and
indemnify, Xxxxxxx, to the same extent and under the same conditions as if
he were an officer of the Company.
19. Legal Advice.
Each party has received independent legal advice
from his or its attorneys with respect to the advisability of making the
settlement provided for herein, with respect to the advisability of
executing this Agreement and with respect to its meaning. Xxxxxxx
specifically acknowledges that his release includes any unknown,
unsuspected, and/or unanticipated claims that he may have, whether or not
they may be material to this Separation Agreement and the releases it
contains. To the maximum extent permitted by law, Xxxxxxx waives any and all
state and federal laws to the contrary.
20. Factual
Investigation. Each party to this Agreement has
made such investigation of the facts pertaining to the matters resolved by
this Agreement and of all the matters pertaining thereto as he or it deems
necessary. Each party hereto is aware that he or it may hereafter discover
claims or facts in addition to or different from those he or it now knows or
believes to be true with respect to the matters resolved herein.
Nevertheless, it is the intention of each party to fully, finally and
forever settle and release all such matters and all claims relative thereto
which may exist or may heretofore have existed between them.
21.
Confidentiality. This Agreement and its
provisions are intended to be confidential. Accordingly, except as may be
required to satisfy the Company’s public disclosure or financial or
accounting requirements or as may be compelled by court order, neither the
Company, its officers and directors, nor Xxxxxxx shall disclose or publicize
to any person, firm or corporation, the terms of this Agreement without the
consent of the other party. As reasonably necessary, Xxxxxxx may discuss
this Agreement with his wife, attorney, financial advisor, tax advisor,
benefit advisor or compensation advisor and Company may discuss this
Agreement with its attorneys, officers, directors and managers provided,
however, that each agrees to be bound by the terms of this paragraph to keep
the information confidential. Xxxxxxx may also discuss this Agreement with
Xxxxx X. Xxxx, and Xxx Xxxxxx, so long as in each instance they are Company
employees at the time of Xxxxxxx’x discussions, and as necessary with
any employer or prospective employer.
22. Assignment.
Each of the parties represents and warrants that he
or it has not heretofore assigned, transferred or granted or purported to
assign, transfer or grant any claims, matters,
demands or causes of
action herein released, disclaimed, discharged or terminated, and agrees to
indemnify and hold harmless any other party from and against any and all
costs, expense, loss or liability incurred as a consequence of any such
assignment.
23. Recitals and
Paragraph Headings. Each term of this Agreement
is contractual and not merely a recital. All recitals are incorporated by
reference into this Agreement. Captions and paragraph headings are used
herein for convenience only, are no part of this Agreement and shall not be
used in interpreting or construing it.
24. Additional
Documents. The parties will execute all such
further and additional documents and undertake all such other actions as
shall be reasonable, convenient, necessary or desirable to carry out the
provisions of this Agreement.
25. No
Admissions. This Agreement effects the settlement
of claims which are denied, disputed and/or contested and nothing contained
herein shall be construed as an admission by any party hereto of any
liability of any kind to any other party. Each of the parties hereto denies
any liability in connection with any claim and intends merely to avoid the
uncertainties and costs of litigation and buy his or its peace.
26. Entire
Agreement. This Agreement constitutes a single
integrated contract expressing the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions with respect to
the subject matter hereof. There are no other agreements, written or oral,
express or implied, between the parties hereto, concerning the subject
matter hereof, except as set forth herein. This Agreement may be amended
only by an agreement in writing.
27. Binding
Effect. This Agreement is binding upon and shall
inure to the benefit of the parties hereto, their heirs, assignees and
successors in interest (including successors in any reorganization or merger
with any other entity).
28. Construction of
Agreement. Each party has cooperated in the
drafting and preparation of this Agreement, and, accordingly, in any
construction or interpretation of this Agreement, the same shall not be
construed against any party by reason of the source of drafting.
29. Costs and
Attorneys’ Fees. Each party is to bear its
own costs and attorneys’ fees incurred in connection with the matters
resolved by this Agreement and in connection with the negotiation and the
preparation of this Agreement. However, in the event of litigation or
arbitration relating to or for the enforcement of this Agreement, the
prevailing party shall be entitled to reasonable attorneys’ fees and
costs actually incurred.
30. Taxes.
Xxxxxxx acknowledges his responsibility for any and all
taxes due with respect to the sums paid to him under this Agreement,
represents that he has received independent advice concerning his tax
obligations, and states that he has not relied upon representations or
advice, if any, of the Company or their counsel concerning the taxable or
nontaxable nature of the sums payable hereunder. Xxxxxxx agrees that he will
indemnify and hold the company harmless from any
and all claims for
taxes, penalties and/or interest based upon the payments to be made under
this Agreement.
31. No Waiver.
The failure to enforce at any time any of the
provisions of this Agreement, or to require at any time performance by the
other party of any of the provisions hereof, shall in no way be construed to
be a waiver of such provisions or to affect either the validity of this
Agreement or any part hereof or the right of either party thereafter to
enforce each and every provision in accordance with the terms of this
Agreement.
32. Arbitration.
Except in connection with an action by the Company
or Xxxxxxx for injunctive or other equitable relief, any controversy,
dispute, or claim between the parties of this Agreement or any party
released pursuant to it, including any claim arising out of or in connection
with the interpretation, performance or breach of this Agreement, shall be
resolved exclusively by arbitration before a single arbitrator conducted in
Washington, D.C., in accordance with the rules of the American Arbitration
Association for the resolution of Employment Disputes. This agreement to
resolve any disputes by binding arbitration shall extend to claims against
any shareholder of the Company, any subsidiary or affiliates of the Company,
any officers, directors, employees, or agents of the Company, or any of the
above, and shall apply as well to claims arising out of state and federal
statutes and local ordinances as well as to claims arising under the common
law. The parties intend that this Agreement to arbitrate be valid,
enforceable and irrevocable and that it provide the exclusive remedy with
respect to all disputes within its scope.
33. Xxxxxxx’x
Understanding. Xxxxxxx states that he has
carefully read this Agreement, which it has been fully explained to him by
his attorney, that he fully understands its final and binding effect and
understands that he is releasing certain rights and entitlements, that the
only promises made to him to sign the Agreement are those stated above, and
that he is signing this Agreement voluntarily.
34. Age
Discrimination in Employment Act Waiver. The
waiver given below is given only in exchange for consideration which is in
addition to anything of value to which Xxxxxxx is already entitled, the
sufficiency of which is hereby acknowledged by Xxxxxxx. The waiver set forth
below does not waive rights or claims which may arise after the date of
execution of this Agreement. Xxxxxxx acknowledges that (i) this entire
Agreement is written in a manner calculated to be understood by Xxxxxxx;
(ii) that by reviewing this Agreement or drafts thereof he has been advised
in writing to consult with an attorney before executing this Agreement, and
(iii) he was given a period of 21 days within which to consider the
Agreement, and (iv) to the extent he executes this Agreement before the
expiration of the 21-day period, he does so knowingly and voluntarily and
only after consulting with an attorney. Xxxxxxx shall have the right to
cancel and revoke this Agreement during a period of 7 days following his
execution of the Agreement and this Agreement shall not become effective,
and no money shall be paid hereunder until the expiration of such 7-day
period. Xxxxxxx or his counsel shall notify the Company’s counsel in
writing of the date of the execution of this Agreement and shall send by fax
((000)000-0000) to Company’s counsel a signed and dated copy of the
signature page signed by Xxxxxxx. The 7-day period of revocation shall
commence upon the date of Xxxxxxx’x execution of this agreement. Within
the 7-day revocation period, Xxxxxxx or his counsel shall forward to the
Company and Company’s counsel a copy of this Agreement fully executed
by Xxxxxxx. In order to revoke this Agreement, Xxxxxxx shall deliver to the
Company,
prior to the
expiration of said 7-day period, a written notice of
cancellation.
In addition to the release set forth at
Paragraph 15 hereof, Xxxxxxx hereby voluntarily and knowingly waives all
rights or claims arising under the Federal Age Discrimination in Employment
Act.
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement on the dates and years written
below.
EXECUTION AND
ACKNOWLEDGMENT BY XXXXX X. XXXXXXX
I received this Separation Agreement on
February 28, 2000. I understand that I have twenty-one (21) days thereafter
within which to consider this Agreement with my legal counsel. I freely
choose to sign this Separation Agreement on February 28, 2000. I understand
that I will have seven (7) days thereafter within which to revoke my
acceptance of this Separation Agreement and that the Separation Agreement
shall not be effective under the expiration of that seven (7) day period.
Executed at Washington, DC, this 28th day of February, 2000.
|
| /s/ XXXXX X.
XXXXXXX
|
|
|
| XXXXX X.
XXXXXXX
EXECUTION AND
ACKNOWLEDGMENT BY THE IT GROUP, INC.
Dated:
,
2000
At:
Monroeville, Pennsylvania
|
| THE IT GROUP,
INC.
|
| By:
/s/ XXX X. XXXXXX
|
|
|
| Duly Authorized XXX
X. XXXXXX
| | | | | | |
