SEPARATION AGREEMENT AND RELEASE OF CLAIMS
SEPARATION
AGREEMENT AND RELEASE OF CLAIMS
THIS
AGREEMENT, entered into as of the ___ day of January 2006, by and between
Franklin Credit Management Corporation (the "Company"), a Delaware corporation,
and Xxxxxxx X. Xxxxxxx ("Employee");
W
I T N E S S E T H:
WHEREAS,
the Employee has been employed as the President and Chief Executive Officer
of
the Company under the Employment Agreement dated as of October 1, 2004 (the
“Employment Agreement”); and
WHEREAS
Employee and the Company have agreed to terminate the employment relationship
between Employee and the Company on an amicable basis.
WHEREAS,
the Employee and the Company desire to settle fully and finally any differences
between them, to facilitate the Employee’s separation and allow for an orderly
transition by the Company.
NOW,
THEREFORE, in consideration of the mutual agreement and covenants contained
herein, the parties do hereby mutually agree as follows:
| 1) |
TERMINATION
OF EMPLOYMENT
|
Employee's
employment shall terminate effective as of January 21, 2006 (the “Termination
Date”). As of the Termination Date, the Employment Agreement and all existing
employment agreements between Employee and the Company, whether oral or written,
are hereby terminated, except as otherwise expressly stated herein. Except
as
otherwise expressly provided herein, the parties agree that this Agreement
supersedes the Employment Agreement (and any such existing employment agreement
between the parties). Additionally, Employee hereby resigns all positions as
an
officer or director of the Company, its subsidiaries and affiliates, effective
immediately.
The
parties represent that they do not have any claim, action, or proceeding pending
against each other, or which arises out of Employee’s employment by the Company
or the separation thereof.
| 2) |
SEVERANCE
PAYMENTS
|
In
addition to paying Employee his salary through January 21, 2006, the Company
shall pay Employee the following amounts (subject to any applicable federal,
state and local tax withholding requirements) in full and complete satisfaction
of all amounts due Employee under the Employment Agreement:
| a) |
The
Company shall pay Employee $282,500.00 on or before January 21, 2006
in
full satisfaction of any and all amounts due under the Employment
Agreement, including but not limited, amounts payable under Sections
4(b)
and 12(b) of the Employment Agreement, severance, medical benefits,
and
reimbursements.
|
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| b) |
An
additional 30,000 shares of Employee’s Restricted Award (as that term is
used in the Employment Agreement and the Restricted Stock Grant Agreement,
effective as of November 4, 2004) that are currently not vested shall
vest
and become non-forfeitable on January 21, 2006 (the “Accelerated Shares”).
All shares comprising the Restricted Award not otherwise vested as
of
January 21, 2006 shall be forfeited pursuant to the Employment Agreement
and paragraph 6 of the Restricted Stock Grant Agreement. The Restricted
Stock Grant Agreement is hereby amended consistent with the
above.
|
| c) |
The
parties shall reasonably cooperate in the certification or
recertification, to the extent required, of the Restricted Stock Grant
and
the Accelerated Shares. Employee shall return to the Company the shares
of
Employee's Restricted Award that are currently not vested and will
not
become vested on or before January 21,
2006.
|
| d) |
Employee
agrees that he shall have no further rights under Section 2 of the
Registration Rights Agreement between the parties.
|
| 3) |
INDEMNIFICATION
|
The
Company shall continue to indemnify Employee in accordance with the terms and
conditions set forth in the Company’s Certificate of Incorporation and By Laws
(as such Certificate of Incorporation and By Laws may be amended from time
to
time) or under the terms and conditions of the agreement currently in place
between the Company and its other officers and directors for a period of six
years from the date of this Agreement. Notwithstanding the forgoing, the
indemnification of Employee shall extend only to acts or omissions of Employee
during the period of time during which Employee was an officer or director
of
the Company.
| 4) |
NON-COMPETITION/NON
AND NON-DISCLOSURE
|
| a) |
Employee
is hereby released from the provisions of Paragraphs 9(a), 9(b)(1)
and
9(b)(3) of the Employment Agreement.
|
| b) |
For
the six year period following the date of this Agreement, Employee
will
cooperate fully with the Company in its defense of or other participation
in any administrative proceeding, judicial proceeding,
governmental
or
regulatory inquiry or
other proceeding arising from any charge, complaint or other action
that
has been or may be filed regarding Company actions in which Employee
was
involved during his employment. The Company shall reimburse Employee
for
his reasonable out-of-pocket expenses associated with Employee’s
cooperation as set forth above.
|
| c) |
Employee
will continue to comply with the terms of Paragraphs 8, 9(b)(2) and
14 of
the Employment Agreement and such terms shall survive execution of
this
Agreement and Employee’s termination of
employment.
|
2
| 5) |
NON-DISPARAGEMENT
|
| a) |
For
a period of two years after the execution of this Agreement, Employee
covenants and agrees that he will not, directly or indirectly, either
for
himself or for any other person: (1) make any disparaging statements
concerning the Company, its past or present subsidiaries or affiliates,
or
their respective past or present officers, directors, agents, or
employees, that could or are intended to injure, impair, or damage
the
reputation or business relationships of such entities; (2) discredit
or
otherwise adversely criticize or engage in any act, directly or
indirectly, not compelled by law, which may tend to bring disparagement,
disrepute, ridicule, or scorn upon the Company, its past or present
subsidiaries or affiliates, their respective business operations, or
any
of their respective past or present agents, employees, directors or
officers; or (3) engage in any form of conduct that disparages, or
is
intended to disparage, the reputation, good will, or commercial interests
of the Company, its past or present subsidiaries or affiliates, or
their
respective past or present officers, directors, agents, or employees.
This
provision does not prohibit Employee from cooperating with appropriate
regulatory authorities or providing accurate information or opinion
related to his current or future business activities or from responding
to
a subpoena or from being compelled to disclose information by judicial
process.
|
| b) |
(b)
For a period of two years after the execution of this Agreement, the
Company covenants and agrees that the Company’s officers and directors
will not: (1) make any disparaging statements concerning Employee that
could or are intended to injure, impair, or damage Employee’s reputation
or business relationships; (2) discredit or otherwise adversely criticize
or engage in any act, directly or indirectly, not compelled by law,
which
may tend to bring disparagement, disrepute, ridicule, or scorn upon
Employee; or (3) engage in any form of conduct that disparages, or
is
intended to disparage, Employee’s reputation, good will, or commercial
interests. This provision does not prohibit the Company (or its officers
or directors) from cooperating with appropriate regulatory authorities
or
providing accurate information or opinion related to the current or
future
business activities of the Company (or its officers or directors) or
from
responding to a subpoena or from being compelled to disclose information
by judicial process.
|
| 6) |
DENIAL
OF LIABILITY
|
Nothing
herein contained shall be construed as an admission by any party hereto of
any
liability of any kind to the other party.
| 7) |
RELEASE
|
Except
as
necessary to enforce the terms of this Agreement, and in exchange for and in
consideration of the promises, covenants and agreements set forth herein,
Employee hereby irrevocably and unconditionally releases and forever discharges
the Company and its past and present parents, subsidiaries, and affiliates,
and
each and all of their respective past and present officers, agents, directors,
supervisors, employees, representatives, predecessors, successors and assigns,
in both their individual and corporate capacities, to the maximum extent
permitted by law, from any and all manner of claims, demands, causes of action,
obligations, damages, or liabilities of any kind or nature whatsoever, at law
or
in equity, known or unknown, suspected or unsuspected, and whether or not
discoverable, which Employee has or may have for any period prior to his
execution of this Agreement, including, without limitation, claims for
additional compensation, claims for severance pay, claims of defamation,
wrongful discharge or breach of contract, claims for unpaid wages or commissions
or bonuses, claims arising under any federal, state or local labor laws, claims
of discrimination under the Age Discrimination in Employment Act of 1967, as
amended, Title VII of the Civil Rights Act of 1964, as amended, the Americans
with Disabilities Act of 1990, the New York State and City Human Rights Laws,
the New Jersey Law Against Discrimination, the New Jersey Conscientious Employee
Protection Act, the New Jersey Family Leave Act, or any other federal, state
or
local laws, claims arising under the Employee Retirement Income Security Act
of
1974, and any claim for attorneys’ fees or costs.
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| 8) |
ADVICE
OF COUNSEL
|
Employee
acknowledges that he entered into this Agreement voluntarily, that he fully
understands all of its provisions, and that no representations were made to
induce execution of this Agreement that are not expressly contained
herein.
Employee
is hereby advised to consult with an attorney prior to executing this Agreement.
Employee acknowledges that he has been afforded an opportunity to consult with
the attorneys of his choice prior to executing this Agreement. Employee
acknowledges that he has consulted with his own tax advisors regarding the
payments hereunder and is not relying on the Company for any advice in this
regard.
Employee
acknowledges that he has been afforded an opportunity to take at least
twenty-one (21) days to consider this Agreement. Employee further understands
and acknowledges that he will have a period of seven (7) calendar days following
his execution of this Agreement in which to revoke his consent, and that such
revocation will be effective only if received in writing by Xxxxxx X. Xxxx,
Xxxxxxxx Credit Management Corporation, Number 0 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx,
Xxx Xxxx Xxx Xxxx 00000 on or before the expiration of this seven (7) day
period. This Agreement will not become effective or enforceable until the
revocation period has expired.
| 9) |
SUCCESSORS
|
| a) |
This
Agreement and the covenants and conditions herein contained shall apply
to, be binding upon, and inure to the benefit of the respective heirs,
administrators, executors, legal representatives, assignees, successors,
and agents of the parties to this
Agreement.
|
| b) |
In
the event of the death of Employee while payments are still due to
him,
said payments are hereby irrevocably assigned to his current spouse
or, in
the case that she does not survive him, his
estate.
|
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| c) |
In
the event Company shall enter into any arrangement or agreement of
merger,
consolidation or any other transaction whereby it either dissolves
or
transfers its assets to another entity or person while payments remain
due
under this Agreement, then this Agreement and the obligations under
it
shall be transferred with the assets, or in the case of dissolution
or
liquidation without any transfer, cause this Agreement to be paid off
from
the sale of its assets.
|
| 10) |
NOTICES
|
Any
notice required or permitted to be given under this Agreement shall be
sufficient if in writing, and if sent by registered mail to his residence in
the
case of the Employee, or to its principal office in the case of the
Company.
| 11) |
WAIVER
|
The
waiver by either party of a breach by the other party of any provisions of
this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
| 12) |
ENTIRE
AGREEMENT
|
Except
as
specifically set forth herein, the Restricted Stock Grant Agreement between
the
parties (as amended herein), and the Registration Rights Agreement (as amended
herein) between the parties, this Agreement shall be deemed to express, embody
and supersede all previous understandings, agreements and commitments, whether
written or oral, between the parties hereto with respect to the subject matter
hereof and fully and finally to set forth the entire agreement between the
parties hereto. No modifications shall be binding unless stated in writing
and
signed by both parties .
| 13) |
APPLICABLE
LAW
|
The
parties acknowledge that no promises or representations have been made to
procure this Agreement that are not contained in this Agreement. This Agreement
shall be construed in accordance with and interpreted under the terms of New
York Law. This Agreement is deemed to be jointly prepared by the parties hereto,
and the language of all parts of this Agreement shall in all cases be construed
as a whole, according to its fair meaning, and not strictly for or against
any
party.
[Signature
page follows.]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as
of the day and year first above written and the Company and the person signing
on its behalf hereby warrant that they are fully authorized to do
so.
Dated
as
of January __, 2006.
| __________________________________ | ||
| Xxxxxxx X. Xxxxxxx | ||
| Xxxxxxxx Credit Management Corporation | ||
| |
|
|
| By: | ___________________________________ | |
| Xxxxxx Xxxx | ||
| Chairman | ||
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