SEPARATION AND FOREBEARANCE AGREEMENT, made as of this 5th day
of October, 2000 (as the same may be supplemented, modified, amended, restated
or replaced from time to time in the manner provided herein, this "Agreement"),
between Xxxxxxx X. Xxxx, an individual currently having an address at 0 Xxxxxxxx
Xxxx, Xxxxxxxx, Xxx Xxxxxx 00000 ("Xxxx"), Xxxxxxxx X. Xxxx, to the limited
extent as provided herein, and an individual currently having an address at 0
Xxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx 00000 ("Xxxxxxxx Xxxx"), and ION Networks,
Inc. a Delaware corporation currently having an address at 0000 Xxxxx Xxxxxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 (the "Company"). The parties referred to
above are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."
WHEREAS, Xxxx has resigned as the Chief Executive Officer and President
of the Company, and as a director of the Company; and
WHEREAS, the parties wish to provide for their respective rights and
obligations with respect to Xxxx'x resignation from the Company and an extension
of the due date for certain amounts owed by Xxxx to the Company.
NOW THEREFORE, for and in consideration of the mutual promises and
covenants hereinafter contained, and other good and valuable consideration, the
receipt and legal sufficiency of which is hereby acknowledged by each Party, the
Parties hereby agree as follows:
1. $200,000 Payment. Xxxx hereby acknowledges that he currently owes
the Company an aggregate amount of Two Hundred Thousand ($200,000) Dollars,
which would otherwise be due and payable now, and that in consideration of the
execution and delivery of this Agreement, the Mortgage and the Guaranty (both as
hereinafter defined), the Company hereby agrees to temporarily forebear such
amounts due to it, and Xxxx hereby agrees to pay the Company such amounts, as
follows:
(a) Fifteen Thousand ($15,000) Dollars shall be paid by Xxxx in cash,
in readily available funds, upon the execution of this Agreement;
(b) Twenty Two Thousand ($22,000) Dollars shall be credited against
payment for all of Xxxx'x accrued and unused vacation time, such payment to be
credited against such $200,000 upon the execution of this Agreement; and
(c) One Hundred and Sixty Three Thousand ($163,000) Dollars which shall
be paid by Xxxx in installment payments as specified hereinafter, of at least
Twenty Thousand ($20,000) Dollars, with the first such installment payment due
on the last to occur of (i) November 1, 2000, or (ii) the tenth business day
following the date of the earnings press release by the Company for the quarter
ended September 30, 2000; the second such installment payment due on December
11, 2000; the third such installment payment due on January 11, 2001; the fourth
such installment payment due on February 9, 2001; the fifth such installment
payment due on March 9, 2001; and the entire remaining balance due on or before
March 31, 2001. This obligation shall be evidenced by a promissory note dated as
of the date hereof in the form of Exhibit A hereto (as the same may be
supplemented, modified, amended, restated or replaced from time to time in the
manner provided therein, the "$163,000 Note"), which shall be executed by Xxxx
and delivered to the Company upon the execution of this Agreement .
2. Repayment of Loan. (a) Xxxx has previously issued to the Company
that certain promissory note dated as of June 27, 2000 in the amount of Seven
Hundred and Fifty Thousand ($750,000) Dollars, plus any interest accrued thereon
(the "Existing Note").
(b) Xxxx acknowledges and agrees that the full $750,000 in principal
and accrued interest is outstanding under the Existing Note, that the Existing
Note was due in full thirty (30) days after Xxxx leaves the employ of the
Company, and that in consideration of the execution and delivery of this
Agreement, the Mortgage and the Guaranty, the Company has agreed to temporarily
forebear payment, and Xxxx agrees to repay the $750,000 Note (as defined below)
in full, together with interest accrued thereon through September 29, 2000, on
April 30, 2001, in accordance with the Existing Note and First Amendment to the
Existing Note (as the same may be supplemented, modified, amended, restated or
replaced from time to time in the manner provided for therein), dated as of the
date hereof, which Existing Note and Form of First Amendment to the Existing
Note are both attached as Exhibit B hereto, and which First Amendment to the
Existing Note shall be executed by Xxxx and delivered to the Company upon the
execution of this Agreement. The Existing Note together with the First Amendment
thereto are referred to herein as the "$750,000 Note", and, together with the
$163,000 Note, the "Notes."
3. Collateralization and Guaranty of Obligations. (a) For the purpose
of securing the payment obligations pursuant to the Notes and Guaranty, Xxxx and
Xxxxxxxx Xxxx shall execute and deliver to the Company upon the execution of
this Agreement a mortgage in the amount of Nine Hundred and Thirteen Thousand
($913,000) Dollars, in favor of the Company, with respect to the property known
as 0 Xxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx 00000 (as the same may be supplemented,
modified, amended, restated or replaced from time to time in the manner provided
therein, the "Mortgage"), such Mortgage attached hereto as Exhibit C. The
Mortgage shall thereafter be reduced by the amount of any payment made to the
Company pursuant to the Notes, until all amounts due thereunder are fully paid.
Xxxx and Xxxxxxxx Xxxx hereby represent and warrant that they own all right,
title and interest in such property, free and clear of claims, liens, security
interests and encumbrances (other than the Mortgage).
(b) In addition, Xxxxxxxx Xxxx shall execute and deliver to the Company
a Guaranty Agreement containing a continuing guaranty of the Notes (as the same
may be supplemented, modified, amended, restated or replaced from time to time
in the manner provided therein, the "Guaranty") upon the execution of this
Agreement, such Guarantee attached hereto as Exhibit D.
4. Stock Options. (a) The Parties understand and agree that it is
anticipated that the primary source for repayment of the Notes to the Company
shall be the stock options described below. For the purpose of facilitating the
payments due hereunder, the Company accepts and consents to Xxxx'x resignation
as an employee, officer and director of the Company, and acknowledges that Xxxx
will exercise and sell any stock options of the Company that he owns and that
currently are exercisable, as listed in Exhibit F hereto, and Xxxx agrees to so
exercise and sell such options in the following manner:
(i) all exercises and sales shall be made by Xxxx through a
brokerage firm designated by the Company (the "Broker"),
provided such Broker allows the options to be exercised and
sold through an irrevocable payment instruction from Xxxx to
the Broker, pursuant to which the exercise price of any
options exercised and sold will be paid with proceeds received
by the Broker from the sale of the shares underlying such
options; Xxxx further agrees that he will not exercise and
sell any of the foregoing stock options other than through the
Broker;
(ii) all proceeds from such sales, not to exceed the total
aggregate amount due to the Company hereunder plus the
aggregate exercise price of any options sold, will be remitted
by the Broker to the Company, and such proceeds (not including
proceeds so remitted in connection with the payment of the
aggregate exercise price) will be applied by the Company (i)
first, towards payment of the exercise price of any options
exercised; (ii) second, payment of withholding required under
any federal, state and local tax laws or regulation (including
FICA) (it being understood that Xxxx shall pay such amounts to
the Company irrespective whether any resale proceeds are
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received by Xxxx or the Company as a result of sale of the
shares underlying such options); (iii) third, against the
amounts due under $163,000 Note, and (iv) fourth, against the
amounts due under the $750,000 Note, until all amounts due
under the Notes have been paid in full. Any funds, if any,
remaining after the payment of all such amounts shall be paid
to Xxxx or as Xxxx may otherwise direct;
(iii) Xxxx shall execute and deliver a directional agreement,
attached hereto as Exhibit E, to the Broker to the same effect
as specified in subparagraph (a)(ii) above.
(b) In connection with the exercise and sale by Xxxx of options as
specified above, the Company shall use its best efforts to register for sale
under the Securities Act of 1933, as amended, the shares underlying any options
owned by Xxxx which are currently exercisable and are not registered, within 4
days after the filing of its Report on Form 10-QSB for the quarter ended
September 30, 2000. If the Company fails to or is unable to so register all of
Xxxx'x option shares (other than those pertaining to shares that have already
been so registered) by December 31, 2000, then the final maturity and payment
dates for the $750,000 Note shall be extended to December 31, 2001, instead of
April 30, 2001.
(c) Xxxx and Xxxxxxxx Xxxx each acknowledges and agrees with the
Company that (i) any fluctuation in the value of the options or option shares
are the sole risk of Xxxx (whether resulting from any delay or failure in the
registration of the shares or otherwise), and (ii) Xxxx will be liable for the
full amount due under the Notes, and will pay and satisfy all of his remaining
obligations under the Notes in full after the application of any net proceeds
from the exercise of the options and the sale of the option shares, in each case
irrespective of the then fair market value of the option shares or the net
amounts (if any) raised and so applied in any exercise of options and sale of
option shares. To the extent that Xxxxxxxx Xxxx has any right, title or interest
in the foregoing options or the shares underlying such options, she hereby
authorizes and agrees to the foregoing exercises and sales of options, and the
foregoing application of the proceeds from such exercises and sales.
(d) The Company and Xxxx acknowledge that the stock options specified
in Exhibit F are currently exercisable and that Xxxx has no claim with respect
to any options other than those listed in Exhibit F.
5. Release by Xxxx. (a) For and in consideration of good and valuable
consideration, receipt of which is hereby acknowledged, Xxxx, and Xxxxxxxx Xxxx
(individually and/or in her capacity as Xxxx'x wife), on behalf of himself or
herself and their respective heirs, family members, executors, administrators,
successors and assigns, hereby fully and forever releases and discharges the
Company, its present and former officers, directors, employees, agents,
investors, shareholders, administrators, representatives, affiliates, divisions,
subsidiaries, parent corporations, predecessor and successor corporations and
assigns from any and all liability for any claim, duty, covenant, warranty,
promise, undertaking, obligation, actions, suit, cause of action, debts,
accounts, judgments, losses, liabilities or damages (collectively "Claims"), of
whatsoever kind or nature, at law, in equity or otherwise, whether presently
known or unknown, suspected or unsuspected, that Xxxx may possess arising from
any omission, act or fact that has occurred from the beginning of time up to and
including the date of this Agreement. Such released claims include, but are not
limited to:
(i) any Claims for wages, separation pay, severance pay, bonuses,
accrued vacation, personal days, holidays, stock options
(other than those set forth in Exhibit F) which are not
currently exercisable, other benefits, attorneys fees, costs
or expenses, including, without limitation, any such Claims
arising out of any written or oral employment agreement with
or any policy, plan or procedure of the Company;
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(ii) any other Claims arising out of Xxxx'x employment with the
Company or his resignation from the Company;
(iii) any Claims arising under the common law, including, without
limitation, all claims pursuant to public policy or tort law;
(iv) all Claims arising under any employment or other agreement,
contract, arrangement, understanding or promise (in each case
whether oral or written and whether express or implied)
between Xxxx and the Company;
(v) all Claims arising under any federal, state or local
constitution, statute, regulation or ordinance to the extent
such claims may be validly waived, including, without
limitation, Title VII of the Civil Rights Act of 1964, as
amended, the Civil Rights Act of 1991, the Age Discrimination
in Employment Act of 1967, as amended, the Americans with
Disabilities Act of 1990, the Equal Pay Act, as amended, the
Fair Labor Standards Act of 1938, as amended, the Family and
Medical Leave Act of 1993, as amended; the New Jersey
Constitution; the New Jersey Law Against Discrimination; the
New Jersey Conscientious Employee Protection Act; and
(vi) all Claims for any other expense, loss or damage.
(b) Xxxx acknowledges that the consideration provided to him
under this Agreement exceeds any payment, benefit and/or other thing of value to
which he might otherwise be entitled pursuant to any policy, plan or procedure
of the Company or pursuant to any prior agreement or contract with the Company.
Xxxx understand that he is not waiving any rights or Claims that arise after the
effective date of this Agreement and that he is not releasing the Company with
respect to any rights he may have under any employee benefit plans as defined in
Section 3(3) of ERISA.
(c) Xxxx further agrees that, except for the purpose of
seeking enforcement of the terms of this Agreement, he will not file or
institute any civil actions, complaints, charges, claims or other proceedings of
any nature or description against the Company before any judicial,
administrative or other forum based upon or arising out of any claims, whether
asserted or unasserted, that he may possess against the Company. If Xxxx
violates this Agreement by filing or instituting any such civil actions,
complaints, charges, claims or other proceedings, Xxxx agrees to pay all costs
and expenses of defending against the suit incurred by the Company, including
its reasonable attorneys' fees, disbursements and costs.
6. Release by the Company. (a) For and in consideration of good and
valuable consideration, receipt of which is hereby acknowledged, and except with
respect to any obligations under this Agreement, the Notes and the Mortgage, the
Company hereby fully and forever releases and discharges Xxxx from any and all
liability for any claim, duty, covenant, warranty, promise, undertaking,
obligation, actions, suit, cause of action, debts, accounts, judgments, losses,
liabilities or damages, of whatsoever kind or nature, at law, in equity or
otherwise, whether presently known or unknown, suspected or unsuspected that the
Company may possess arising from any omission act or fact that has occurred from
the beginning of time up to any including the date of the Agreement; provided,
however, Xxxx hereby represents and warrants that Xxxx has no knowledge of any
issue, fact or circumstance constituting fraud against the Company or
missapropriation of Company funds or property, and Xxxx acknowledges and agrees
that the Company's release of Xxxx as to claims unknown to the Company (not
imputing Xxxx'x knowledge to the Company) is contingent on the accuracy of such
representation and warranty. Xxxx agrees to indemnify and hold harmless the
Company from and against any and all charges, claims, causes of action, losses
or other expenses, including attorney's fees, incurred by the Company to the
extent arising from the issues, facts or circumstances constituting such fraud
or misappropriation.
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(b) The Company agrees that, except for the purpose of seeking
enforcement of the terms of this Agreement and any claims for breach thereof
(including but not limited to with respect to the Notes and Mortgage), it will
not file or institute any civil actions, complaints, charges, claims or other
proceedings of any nature or description against Xxxx before any judicial,
administrative or other forum based upon or arising out of any claims, whether
asserted or unasserted, that the Company may possess against Xxxx. If the
Company violates this Agreement by filing or instituting any such civil actions,
complaints, charges, claims or other proceedings, the Company agrees to pay all
costs and expenses of defending against the suit incurred by Xxxx, including his
reasonable attorney's fees, disbursements and costs.
7. Entire Agreement. This Agreement and the exhibits thereto contain
the entire understanding between the Parties with respect to, and contain all
terms and conditions pertaining to, the subject matter hereof. This Agreement
and the exhibits thereto supersede any prior agreements, arrangements or
understandings between the Parties, whether written or oral, relating to the
subject matter hereof.
8. Severability. If any provision of this Agreement shall be determined
to be invalid or unenforceable to any extent, the remainder of the terms and
provisions of and obligations in this Agreement and the application of such
terms, provisions and undertakings shall not be affected and shall be enforced
to the greatest extent permitted by law.
9. Legal Representation. The Parties represent and warrant to the other
that he, she or it has had full opportunity to obtain, and has in fact obtained,
the advice of his, her or its own legal counsel with respect to this Agreement.
10. Notices. Any notice or demand required or permitted to be given or
made hereunder to or upon either Party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service against receipt, or (ii) certified or registered mail,
postage paid, return receipt requested, or (b) sent by telegram, telecopy,
telex, e-mail or similar electronic means, provided that a written copy thereof
is sent on the same day by postage paid first-class mail, to such party at the
following address:
If to Xxxx or Xxxxxxx and Xxxxxxxx Xxxx
Xxxxxxxx Xxxx: 0 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
with a copy to: Xxxx X. Xxxxxxxxx, Xx.
Xxxxxx, Xxxxxxxx & Xxxxxx, P.C.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
If to the Company: ION Networks, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Chairman of the Board of
Directors
with a copy to: Xxxxx Xxxxxxxxx, Esq.
Xxxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
or such other address as either Party may at any time direct by notice given to
the other Party in accordance with this paragraph. The date of giving any such
notice shall be, in the case of clause (a)(i), the date of receipt; in the case
of clause (a) (ii), five (5) business days after such notice is sent; and in the
case of clause (b), the business day next following the date such notice is
sent.
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11. Governing Law; Jurisdiction. This Agreement shall be governed by
the laws of the State of New Jersey, without giving effect to principles of
conflicts or choice of law thereof. The Parties hereto consent to the exclusive
jurisdiction of any state or federal court located within the County of
Middlesex, New Jersey, and irrevocably agree that all disputes relating to this
Agreement shall be litigated in such courts, and the Parties waive any objection
which they may have based on improper venue or forum non-conveniens to conduct
the proceeding in any such court.
12. Survival of Obligations. The rights and obligations of the Parties
pursuant to this Agreement shall survive the execution of this Agreement.
13. Counterpart Signature; Facsimile. This Agreement may be signed in
counterparts, each of which shall constitute an original, and shall become
effective as if executed in a single, complete document upon execution by the
undersigned parties. Facsimile signatures of the undersigned parties will have
the same force and effect as original signatures.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
ION NETWORKS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman
/s/ Xxxxxxx X. Xxxx
-------------------------------
Xxxxxxx X. Xxxx
By signing below, the undersigned hereby agrees to be bound by the
terms and provisions of this Agreement, including (without limitation) Sections
3(a), 3(b), 4(c), 5 and 7 through 13 hereof.
/s/ Xxxxxxxx X. Xxxx
-------------------------------------
Xxxxxxxx X. Xxxx
