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EXHIBIT 10.5
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") made as of the 20th day of
July, 1999 by and between COMPUTER LEARNING CENTERS, INC., a Delaware
corporation (the "Company"), and XXXXXXXXX XXXXXXXXX (the "Executive").
The Executive is presently employed by the Company as its Vice President.
The Board of Directors of the Company (the "Board") desires to set forth
the nature and amount of compensation and other benefits to be provided to the
Executive and any of the rights of the Executive in the event of her termination
of employment with the Company. The Executive is willing to commit herself to
continue to serve the Company, on the terms and conditions herein provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into this Agreement under the terms and conditions set forth below.
Accordingly, in consideration of the promises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue to serve the Company, on
the terms and conditions set forth herein.
2. Term. The term of Executive's employment under Section 1 will terminate
upon the termination of Executive's employment with the Company for any reason
whatsoever. No such termination shall affect any of the Company's other
obligations under this Agreement arising at or after such termination of
employment.
3. Position and Duties. The Executive shall serve as Vice President of the
Company and shall have such responsibilities and authority as may normally be
exercised by a person in such position at a company.
4. Place of Performance. The Executive shall be based at the current
principal executive offices of the Company in Northern Virginia, or in the
Company's headquarters, provided that such headquarters is not more than
thirty-five (35) miles from the location of the Company's principal executive
offices on the date hereof.
5. Compensation and Related Matters.
(a) Base Salary. During the Executive's employment with the Company,
the Company shall pay to the Executive a salary at a rate of not less than One
Hundred Fifty Thousand Dollars ($150,000) per annum in equal installments as
nearly as practicable on the normal payroll periods for employees of the Company
generally (the "Base Salary"). The Base Salary may be increased from time to
time and, if so increased, shall not thereafter be decreased during the term of
this Agreement.
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(b) Bonus. The Executive shall be eligible to receive an annual bonus
(the "Annual Bonus") payable under the Company's bonus plan in accordance with
the bonus criteria established by the Board or the Chief Executive Officer for
the Executive on an annual basis.
(c) Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in performing services hereunder,
including all expenses of travel and living expenses while away from home on
business or at the request of and in the service of the Company, provided that
such expenses are incurred and accounted for in accordance with the policies and
procedures established by the Company.
(d) Benefits. During the term of the Executive's employment hereunder,
the Company shall maintain in full force and effect, and the Executive shall be
entitled to continue to participate in, all of its employee benefit plans and
arrangements in effect on the date hereof in which the Executive participates or
receives benefits, or plans or arrangements providing the Executive with at
least equivalent benefits thereunder. The Company shall not make any changes in
such plans and arrangements which would adversely affect the Executive's rights
or benefits thereunder, unless such change occurs pursuant to a program
applicable to all officers of the Company and does not result in a
proportionately greater reduction in the rights of or benefits to the Executive
as compared with any other officers of the Company. The Executive shall be
entitled to participate in or receive benefits under any employee benefit plan
or arrangement made available by the Company in the future to its officers and
key management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements. Nothing
paid to the Executive under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of any amounts payable to
the Executive pursuant to this Section 5.
6. Termination and Definitions.
(a) Cause. This Agreement shall immediately be terminated and neither
party shall have any future obligation hereunder, except for the Company's
obligations in Section 7 hereof, and except for the Executive's obligations in
Section 8 hereof, if the Executive's employment is terminated for Cause.
(b) Termination by the Executive. The Executive may terminate her
employment hereunder for Good Reason.
(c) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto.
(d) Definitions.
(i) For purposes of this Agreement, termination "for Cause" shall
arise where termination results from theft or dishonesty in the conduct of the
Company's business, or intoxication while on duty, or conviction of a felony, in
each case having a material adverse effect on the business of the Company.
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(ii) For purposes of this Agreement, "Good Reason" shall mean (A)
a Change in Control of the Company (as defined below), (B) a decrease in the
total amount of the Executive's Base Salary below its level in effect on the
date hereof, (C) a reduction in the importance of the Executive's job
responsibilities without the Executive's consent or (D) a geographical
relocation of the Executive without his consent.
(iii) For purposes of this Agreement, a "Change in Control" of
the Company shall be deemed to have occurred if (A) any person (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) of more of the combined voting power of
the Company's then outstanding securities, (B) during any period of two (2)
consecutive years during the term of this Agreement, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in office who
were directors at the beginning of the period, (C) the shareholders of the
Company approve a merger or consolidation involving the Company resulting in a
change of ownership of a majority of the outstanding shares of capital stock of
the Company, or (D) the shareholders of the Company approve a plan of
liquidation or dissolution of the Company or the sale or disposition by the
Company of all or substantially all of the Company's assets.
(iv) For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
7. Compensation upon Termination.
(a) Termination for Cause or Resignation Without Good Reason. If (i)
the Executive's employment shall be terminated for Cause, or (ii) the Executive
voluntarily resigns from the employ of the Company and Good Reason shall not
have occurred, then the Company shall pay the Executive her Base Salary through
the date of delivery to her of a Notice of Termination at the rate then in
effect at the time and date the Notice of Termination is delivered, and the
Company shall have no further obligations to the Executive under this Agreement.
(b) Termination Without Cause or Resignation for Good Reason. If the
Company shall terminate the Executive's employment other than pursuant to
Section 6(a) hereof (it being understood that a purported termination pursuant
to Section 6(a) hereof, which is disputed and finally determined not to have
been pursuant to Section 6(a) shall be a termination by the Executive pursuant
to Section 6(b)) or if the Executive terminates her employment for Good Reason,
then:
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(i) the Company shall pay to the Executive her Base Salary
through the date of termination at the rate in effect at the time Notice of
Termination is delivered; and
(ii) in lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of termination, the Company shall
pay on the date of termination, as severance pay to the Executive, a lump sum
payment in an amount equal to one hundred percent (100%) of the Executive's Base
Salary in effect as of the date of termination.
(c) Termination Upon a Change in Control. If there is a Change in
Control of the Company or there has been a public announcement of a Change in
Control of the Company (provided, however, that consummation of the Change in
Control of the Company shall be a condition precedent to the effectiveness of
this provision) and at any time thereafter the employment of the Executive under
this Agreement is terminated other than pursuant to Section 6(a) hereof by the
Company or a successor entity or is terminated with Good Reason by the
Executive, then:
(i) the Company shall pay to the Executive her Base Salary
through the date of termination at the rate in effect at the time Notice of
Termination is given; and
(ii) in lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of termination, the Company shall
pay on the date of termination as severance pay to the Executive, a lump sum
payment in an amount equal to one hundred fifty percent (150%) of the
Executive's Base Salary in effect as of the date of termination.
(d) Continuation of Benefit Plans. Upon any termination of the
Executive's employment, other than pursuant to Section 6(a) hereof or by the
Executive without Good Reason, the Company shall maintain in full force and
effect for the continued benefit of the Executive for twelve (12) months, or
eighteen (18) months if there has previously occurred a Change in Control of the
Company, all employee benefit plans and programs in which the Executive was
entitled to participate.
(e) Participation in Benefit Plans after Termination of Employment.
The Executive shall be entitled to continue to participate in any benefit plan
or program of the Company for twelve (12) months after the expiration of the
period provided for in Section 7(d), provided, that the Executive pays the
direct cost of any such benefit plan or program.
8. Covenants Not to Compete or Hire Employees. It is recognized and
understood by the parties hereto that the Executive, through the Executive's
association with the Company as an employee, shall acquire a considerable amount
of knowledge and goodwill with respect to the business of the Company, which
knowledge and goodwill are extremely valuable to the Company and which would be
extremely detrimental to the Company if used by the Executive to compete with
the Company. It is, therefore, understood and agreed by the parties hereto that,
because of the nature of the business of the Company, it is necessary to afford
fair protection to the Company from such competition by the Executive.
Consequently, as a material inducement to the Company to enter into this
Agreement, the Executive covenants and agrees that for the period commencing
with the date hereof and ending one (1) year after the
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Executive's termination of employment with the Company, the Executive shall not
engage, directly, indirectly or in concert with any other person or entity, in
the information technology training industry in the geographical area of the
contiguous forty-eight (48) states of the United States. The Executive further
covenants and agrees that for the period commencing on the date of the
Executive's termination of employment for any reason whatsoever and ending one
(1) year after the Executive's termination of employment with the Company, the
Executive shall not, directly or indirectly, hire or engage or attempt to hire
or engage any individual who shall have been an employee of the Company at any
time during the one (1)-year period prior to the date of the Executive's
termination of employment with the Company, whether for or on behalf of the
Executive or for any entity in which the Executive shall have a direct or
indirect interest (or any subsidiary or affiliate of any such entity), whether
as a proprietor, partner, co-venturer, financier, investor or stockholder,
director, officer, employer, employee, servant, agent, representative or
otherwise.
9. Successors; Binding Agreement.
(a) Successors. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 9 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) Binding Agreement. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
10. Notice. For the purposes of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed, if to the Executive, to her address as it appears in the
records of the Company, or if to the Company, as follows:
Computer Learning Centers, Inc.
00000 Xxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
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or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
11. Prior Agreement. All prior agreements between the Company and the
Executive with respect to the employment of the Executive are hereby superseded
and terminated effective as of the date hereof and shall be without further
force or effect.
12. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and duly authorized officer of the Company. No
waiver by either party hereto at any time of any breach by the other hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Virginia.
13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
14. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators, in Washington, D.C., in accordance with the
rules of the American Arbitration Association then in effect. The expense of
such arbitration shall be borne by the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date and year first above written.
COMPUTER LEARNING CENTERS, INC.
Date: July 20, 1999 By:/s/ XXXX XXXXXXX
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Xxxx Xxxxxxx, Chief Executive Officer
EXECUTIVE:
/s/ XXXXXXXXX XXXXXXXXX
Date: July 20, 1999 -----------------------------------------
Xxxxxxxxx Xxxxxxxxx
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