Exhibit 10.3
TERMINATION AGREEMENT
This Termination Agreement (the "Agreement") is entered into as of
April 5, 1997 (the "Effective Date"), by and between CELERITY SYSTEMS, INC., A
Tennessee corporation with a principal place of business in Knoxville, Tennessee
(the "Company"), and XXXXXXX XXXXXXXX, an individual who resides in Maryville,
Tennessee ("Xxxxxxxx").
WITNESSETH
WHEREAS, during the period prior to the Effective Date, Xxxxxxxx has
been employed as President of the Company and was previously employed as the
Company's Chief Executive Officer, pursuant to the terms of an Employment,
Non-Solicitation, Confidentiality and Non-Competition Agreement dated May 1,
1995 (the "Prior Agreement"); and
WHEREAS, during the period prior to the Effective Date, Xxxxxxxx has
been an officer and director of the Company; and
WHEREAS, the parties desire Xxxxxxxx to cease being employed by the
Company and desire that Xxxxxxxx cease being an employee, officer and director
of the Company; and
WHEREAS, the parties desire to terminate the Prior Agreement; and
WHEREAS, the parties desire the terms of this Agreement to govern
the continuing relations and obligations between the Company and Xxxxxxxx and
desire this Agreement to supersede all other prior agreements between the
parties, including but not limited to the Prior Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby mutually acknowledged, the Company and Xxxxxxxx
hereby agree as follows:
1. TERMINATION OF PRIOR AGREEMENT
The Prior Agreement, dated May 1, 1995, is hereby terminated,
cancelled, rescinded and of no further force or effect.
2. PAYMENTS BY COMPANY TO XXXXXXXX
2.1 Subject to the provisions contained in Section 2.2., the Company
agrees that it will make the following payments to Xxxxxxxx:
a) The Company will pay Four Thousand Dollars ($4,000.00)
to Xxxxxxxx on the Effective Date;
b) Beginning on the first business day of May, 1997, and on
or before the first business day of each succeeding
month to and including April, 1998, the Company will
make monthly payments to Xxxxxxxx in the amount of
Eleven Thousand Four Hundred Fifty-Eight Dollars and
Thirty-Three cents ($11,458,33);
c) On or before the first business day of May, 1998, the
Company will pay Seven Thousand Four Hundred Fifty-Eight
Dollars and Thirty- Three cents ($7,458.33) to Xxxxxxxx;
d) On or before the first business day of June, 1998, and
on or before the first business day of May, 2000, the
Company will make monthly payments to Xxxxxxxx in the
amount of Eleven Thousand Four Hundred Fifty-Eight
Dollars and Thirty-Three cents ($11,458.33).
The amounts set forth above shall be reduced by the amount of income from all
non-passive activities received by Xxxxxxxx during the term of this Agreement.
2.2 The obligation of the Company to make those payments described
in Section 2.1. above shall terminate and cease upon the occurrence of the
earliest of the following:
a) the first business day of May, 2000;
b) the date on which the Company has a registration
statement for an initial public offering of its common
stock declared effective;
c) the date on which a person or entity not a party to this
AGREEMENT makes a bona fide offer to purchase all of
Xxxxxxxx'x shares of stock in the Company for the fair
market value of such shares (which in no event shall be
less than $2.00 per share), which fair market shall be
determined by Coopers & Xxxxxxx by reference to the
procedures used in calculating fair market value for
purposes of grants of options of the Company's common
stock pursuant to the Company's Stock Option Plan or
other plan;
d) the date on which the Company makes an offer to purchase
all of Xxxxxxxx'x shares of stock in the Company for the
fair market value of such shares (which in no event
shall be less than $2.00 per share), which fair market
shall be determined by Coopers & Xxxxxxx by reference to
the procedures used in calculating fair market value for
purposes of grants of options of the Company's common
stock pursuant to the Company's Stock Option Plan or
other plan;
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e) the date on which Xxxxxxxx breaches any term or
provision of this Agreement and the Company notifies
Xxxxxxxx of such breach; or
Notwithstanding anything in this Agreement to the contrary, the termination and
cessation of the Company's obligation to make those payments described in
Section 2.1. above shall NOT terminate or otherwise affect the rights and
obligations of the parties set forth in the other provisions of this Agreement.
2.3 The obligations of the Company to make those payments described
in Section 2.1 shall be reduced as described in Section 2.1 and shall be further
reduced or modified as follows:
a) If the Company has received no payments from En K
Telecom Co., Ltd. ("En K") pursuant to the Server
License Agreement dated February 21, 1997 (the "Server
License"), between the Effective Date and May 5, 1997,
the Company's payment obligations under Section 2.1.
shall cease and terminate on December 31, 1997; provided
that all other terms of this Agreement shall remain in
full force and effect.
b) If the Company has received less than $1,000,000 from En
K pursuant to the Server License between the Effective
Date and May 5, 1997, then the Company's payment
obligations under Section 2.1 shall be reduced to an
amount determined by multiplying the amount of each such
payment by a fraction, the numerator of which shall be
the amount actually received by the Company from En K
pursuant to the Server License between the Effective
Date and May 5, 1997, and the denominator of which shall
be $2,000,000; provided that all other terms of this
Agreement shall remain in full force and effect.
c) If the Company has received between $1,000,000 and
$1,999,999 from En K pursuant to the Server License
between the Effective Date and May 5, 1997, then each
payment to be made by the Company from and after May 5,
1997 shall be reduced by 50%, provided that all other
terms of this Agreement shall remain in full force and
effect.
d) If the Company has received at least $2,000,000 from En
K pursuant to the Server License between the Effective
Date and May 5, 1997, then the Company's payment
obligations pursuant to Section 2.1 and all other terms
of this Agreement shall remain in full force and effect.
3. WAIVER OF CLAIMS AND RIGHTS; SET OFF
Xxxxxxxx acknowledges that, as of the Effective Date, there are no
moneys owed to him by the Company. Except for those payments described in
Section 2 above, Xxxxxxxx waives any
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right or claim he may have to any payments of money, including without
limitation salary, reimbursements or other payments, from the Company. Except as
otherwise required by federal or state law, including the provisions of COBRA,
Xxxxxxxx also waives any right or claim he may have to any employee benefits or
other benefits from the Company, including without limitation health coverage,
dental coverage, life insurance and disability insurance. Further, by signing
below, Xxxxxxxx hereby releases the Company of and from any and all claims he
may have against the Company, including but not limited to, any claims relating
to the Prior Agreement. Further, the parties agree that in the event that the
Company is obligated to satisfy liabilities of any kind related to Xxxxxxxx'x
conduct and/or actions as an employee, officer and/or director of the Company
(provided the Company is not actually aware of such conduct on the date of this
Agreement or as a result of written disclosures to it by Xxxxxxxx), or if the
Company is obligated to satisfy liabilities incurred by Xxxxxxxx which were not
disclosed by Xxxxxxxx to the Company on or before the Effective Date, the
Company shall have the right to set off the amount of such liabilities against
any amounts owed to Xxxxxxxx under Section 2.
4. RESIGNATION
Xxxxxxxx agrees that on or before the Effective Date he will execute and
deliver to the Company a letter of resignation whereby he resigns from his
position as a director, officer and employee of the Company, and if applicable,
from any similar positions held by him for any of the Company's affiliates.
5. AGREEMENT TO PROVIDE INFORMATION AND EXECUTE DOCUMENTS
5.1 In the event that the Company pursues an Initial Public
Offering, Xxxxxxxx agrees that, upon the request of the Company, he will
cooperate with the Company's efforts to bring such Initial Public Offering to
fruition, and further, Xxxxxxxx agrees that he will execute any and all
documents reasonably requested by the Company which concern, in any way, his
activities as a director, officer and/or employee of the Company and any and all
documents which are customarily required of a corporate insider. Furthermore,
Xxxxxxxx agrees that, upon the request of the Company, he will provide any and
all reasonable, necessary and customary information concerning, in any way, his
activities as a director, officer and/or employee of the Company.
5.2 Xxxxxxxx agrees that, upon the request of the Company, he will
execute any and all documents reasonably requested by the Company which relate
to any way to his activities as a director, officer and/or employee of the
Company.
6. NO SOLICITATION; CONFIDENTIALITY; NON-COMPETITION; NON-RAID;
NON-DISPARAGEMENT; NO CONTACT
6.1 During the three (3) year period of time beginning on the
Effective Date and ending on that date which is three (3) years from the
Effective Date (hereinafter, the "Three Year Period"), neither Xxxxxxxx nor any
Controlled Person (as defined below) will, without the prior
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written consent of the Chief Executive Officer of the Company, directly or
indirectly contact, solicit for employment, employ in any capacity or make an
unsolicited recommendation to any other person that it employ or solicit for
employment any person who is or was, at any time during the 12-month period
prior to the Effective Date, or during the Three Year Period, an officer, or
employee of the Company or any affiliate of the Company (any such officer, or
employee being referred to hereafter as a "Company Professional"). As used in
this Agreement, the term "Controlled Person" shall mean any company,
partnership, firm or other entity as to which Xxxxxxxx possesses, directly or
indirectly, the power to direct or cause, or actually causes the direction of
the management and policies of such entity, whether through ownership of voting
securities, by contract or otherwise. Notwithstanding the foregoing, Xxxxxxxx
may continue to maintain existing personal and social contacts with former or
current employees of the Company provided that the current or future business of
the Company, its customers and affiliates are not the subject of any discussions
with such employees. Xxxxxxxx also agrees he will not enter or attempt to enter
the offices of the Company or its affiliates without the prior consent of the
Chief Executive Officer.
6.2 Xxxxxxxx acknowledges that, through his status as President and
Chief Executive Officer of the Company and as a director of the Company, he has
possession of important and confidential information and knowledge as to the
business of the Company and its affiliates, including but not limited to,
knowledge of marketing and operating strategies, licensing and other agreements,
financial results and projections, future plans, the provisions of other
important contracts entered into by the Company and its affiliates, possible
acquisitions and similar information. Xxxxxxxx agrees that all of such knowledge
and information constitute a vital part of the business of the Company and its
affiliates and are by their nature trade secrets and confidential information
proprietary to the Company and its affiliates (collectively, "Confidential
Information"). Xxxxxxxx agrees that he shall not at any time following the date
of this Agreement, divulge, communicate, furnish or make accessible (whether
orally or in writing or in books, articles or any other medium) to any
individual, firm, partnership, corporation or other entity, any knowledge or
information with respect to Confidential Information directly or indirectly
useful in any aspect of the business of the Company or its affiliates. As used
in the preceding sentence, "Confidential Information" shall not include any
knowledge or information that: (a) is or becomes available to others, other than
as a result of breach by Xxxxxxxx of this Section 6.2; or (b) becomes available
generally to a recipient on a nonconfidential basis from a third party (other
than the Company, any present or former customer of the Company, any affiliate
or any of its or their representatives or Xxxxxxxx) who is not bound by any
confidentiality obligation to the Company or any affiliate of the Company.
6.3 During the Three Year Period, neither Xxxxxxxx nor any
Controlled Person will render any services, directly or indirectly, as an
employee, officer, consultant or in any other capacity, to any individual, firm,
corporation, partnership or similar entity engaged in the design, development,
manufacture or marketing of CD-WorkWare and VCD software, hardware or consulting
services, interactive video servers, set top boxes or related products and
technology or similar activities competitive with any activities in which the
Company or any of its affiliates is engaged at the Effective Date or at any time
during the Three Year Period (such activities being herein called the "Company
Business"). During the Three Year Period, Xxxxxxxx shall not, without the prior
written consent of
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the Company, hold an equity interest in any firm, partnership, corporation or
similar entity which competes with the Company Business, except that beneficial
ownership by Xxxxxxxx (including ownership by one or more members of his
immediate family and any entity under his direct or indirect control) of less
than 2% of the outstanding shares of capital stock of any corporation which may
be engaged in any of the same lines of business as the Company Business, if such
stock is listed on a national securities exchange or publicly traded in the
over-the-counter market, shall not constitute a breach of the covenants
contained in this Section 6.3.
6.4 During the Three Year Period and except as otherwise approved by
the Company's Chief Executive Officer, neither Xxxxxxxx nor any Controlled
Person will solicit or have any contact, whether directly or indirectly, with
any of the Company's current or former employees, or with any of its affiliates,
customers or suppliers. Furthermore, during the Three Year Period, neither
Xxxxxxxx nor any Controlled Person will solicit or have any contact, whether
directly or indirectly, with any potential customers of the Company or of any of
its affiliates, if such potential customers are or were identified through leads
developed during the period of Xxxxxxxx'x employment with the Company, nor will
Xxxxxxxx nor any Controlled Person divert or attempt to divert any existing
business of the Company or of any of its affiliates.
6.5 During the Three Year Period, neither Xxxxxxxx nor any
Controlled Person will publish or communicate, or cause to be published or
communicated, any statement which disparages, in any way and to any degree, the
Company, its affiliates, the products or services of the Company or of its
affiliates, or any employee, director or officer of the Company or of its
affiliates.
6.6 The provision contained in this Section 6 as to the time
periods, scope of activities, persons or entities affected and territories
restricted shall be deemed divisible so that, if any provisions contained in
this Section 6 is determined to be invalid or unenforceable, such provisions
shall be deemed modified so as to be valid and enforceable to the full extent
lawfully permitted. The provisions of this Section 6 shall survive any
termination of this Agreement.
6.7 Xxxxxxxx agrees that the provisions of this Section 6 are
reasonable and necessary for the protection of the Company and that they may not
be adequately enforced by an action for damages and that, in the event of a
breach thereof by Xxxxxxxx or any Controlled Person, the Company shall be
entitled to apply for and obtain injunctive relief in any court of competent
jurisdiction to restrain the breach or threatened breach of such violation or
otherwise to enforce specifically such provisions against such violation,
without the necessity of the posting of any bond by the Company and without
waiver of any right to terminate payments, to seek damages or pursue any other
remedy provided for herein or otherwise available under applicable law.
7. AMENDMENTS
This Agreement may not be altered, modified or amended except by a written
instrument signed by each of the parties hereto.
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8. ASSIGNMENT
The duties and obligations, as well as the rights and benefits, of the
Agreement shall be binding upon, and inure to the benefit of, the successors,
assigns, and personal representatives of the parties hereto.
9. WAIVER
Waiver by any party hereto of any breach or default by any other party of
any of the terms of this Agreement shall not operate as a waiver of any other
breach or default, whether similar to or different from the breach or default
waived.
10. SEVERABILITY
In the event that any one or more provisions of this Agreement shall be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
11. ENTIRE AGREEMENT
This Agreement contains the entire understandings of the parties. There
are no restrictions, agreements, promises, warranties, covenants or undertakings
other than those expressly set forth herein. This Agreement supersedes and
terminates all prior agreements, arrangements and understandings between the
parties, whether oral or written, including but not limited to, the Prior
Agreement.
12. NOTICES
All notices and other communications provided for in this Agreement shall
be in writing and shall be deemed to have been duly given when personally
delivered or when mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Xxxxxxxx: Xxxxxxx Xxxxxxxx
0000 XxXxxxx Xxxxx
Xxxxxxxxx, XX 00000
With a copy to: London, Xxxxxx & Xxxxxxxxx, P.C.
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxxx, Xx.
If to the Company: Celerity Systems, Inc.
0000 Xxxxxxxxx Xxxx Xxxxx
0
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Van Meter,
Chief Executive Officer
With a copy to: Xxxxxx, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxx, Esq.
Or to such other address or such other person as Xxxxxxxx or the Company shall
designate in writing in accordance with this Section 12, except this notices
regarding changes in notices shall be effective only upon receipt.
13. HEADING
Headings to Sections in this Agreement are for the convenience of
the parties only and are not intended to be a part of, or to affect the meaning
or interpretation of, this Agreement.
14. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Tennessee
without reference to the principles of conflict of laws. Each of the parties
hereto consents to the jurisdiction of the federal and state courts of the State
of Tennessee in connection with any claim or controversy arising out of or
connected with this Agreement. Service of process in any such proceedings may be
made upon each of the parties hereto at the address of such party as determined
in accordance with Section 12 of this Agreement, subject to the applicable rules
of the court in which such action is brought.
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IN WITNESS WHEREOF, the Company and Xxxxxxxx have caused this
Agreement to be executed as of the date first above written.
/s/ Xxxxx X. Xxxxx /s/ Xxxxxxx Xxxxxxxx
--------------------------- --------------------------------
Witness Xxxxxxx Xxxxxxxx
CELERITY SYSTEMS, INC.
/s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Van Meter
--------------------------- -----------------------------
Witness Print Name: Xxxxxxx X. Van Meter
Its: Chief Executive Officer
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Agreement about Incidentals
The following has been agreed to as part of the termination agreement between
Xxxxxxx Xxxxxxxx and Celerity Systems, Inc.
Celerity Systems will pay up to 6 hours of Xx. Xxxxxxxx'x Legal xxxx incurred
during these negotiations. To be paid promptly upon receipt.
Xx. Xxxxxxxx will be able to keep the Lap Top that he is presently using.
The following furniture will be given to Xx. Xxxxxxxx:
1) Wood credenza in his office,
2) The red leather couch,
3) 6 black cloth straight back chairs.
I Agree: /s/ Xxx Van Meter I Agree: /s/ Xxxxxxx Xxxxxxxx
--------------------------- ----------------------
Xxx Van Meter Xxxxxxx Xxxxxxxx
CEO
Celerity Systems, Inc.
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