March 13, 2009
EXECUTION
COPY
March 13,
2009
Xxxxxx X.
Xxxxxx, Xx.
Re: Separation Agreement and
Mutual Release (the “Agreement”)
|
|
1.
|
On
the Effective Date (as defined in Section 8 below), your Employment
Agreement dated as of September 13, 2007 as amended on October 24, 2008
(the “Employment Agreement”) shall terminate forever, except for Sections
5 through 9, 13 through 15 and 21 through 26 which shall remain in effect
subject to any express modifications as set forth
herein.
|
|
|
2.
|
On
and as of the Effective Date, you will relinquish all of your positions as
an officer and director and/or manager of the Company and its subsidiaries
and your employment with the Company will terminate. You agree
to sign any documents reasonably requested by the Company to confirm or
effectuate the foregoing. From the date hereof until the
Effective Date, you will continue to serve as Chief Executive Officer but
you shall not be physically present at the Company’s office and shall not
take any actions in your capacity as Chief Executive Officer, except as
otherwise directed by the Board or requested by Xxxxx Xxxx, who will
become interim Chief Executive Officer on the Effective Date, and you will
refer any inquiries from customers, vendors, investors or employees to
Xxxxx Xxxx. For the avoidance of doubt, you acknowledge and
agree that the foregoing limitations on your authority and
responsibilities will not constitute “good reason” (as defined in the
Employment Agreement). During the period between the Effective
Date and March 31, 2009, you will make yourself available, at such times
(which may be substantially full-time) and at such places as mutually
agreeable to you and Xxxxx Xxxx, to assist the Company in the transition
of your responsibilities. During the remainder of the
twelve-month period immediately following the Effective Date, you will
make yourself reasonably available, consistent with your other personal
and professional responsibilities, to promptly respond to questions or to
provide information or other assistance reasonably requested by the
Company.
|
In
addition, you agree that at any time after the Effective Date you will cooperate
with the Company and its attorneys in connection with any existing or future
litigation against the Company or any of its subsidiaries, whether
administrative, civil, or criminal in nature, in which and to the extent the
Company deems your cooperation necessary, and that you will make yourself
reasonably available to confer with the Company’s or its subsidiaries’
attorneys, representatives and other personnel as reasonably necessary to assist
the Company and/or provide truthful testimony as a witness. The
Company will reimburse you, upon proper accounting, for reasonable expenses and
disbursements incurred by you in assisting the Company pursuant to this
paragraph and will pay you a reasonable per diem for each full business day you
are required to devote to assisting the Company in connection with any such
litigation.
|
|
3.
|
The
Form 8-K and press release regarding your separation is attached hereto as
Appendix A (the “Press Release”). The Company will issue the
Press Release immediately following the filing of Form 10-K and Form 8-K
which shall occur no later than 9:00AM on March 13,
2009. Except as provided in Section 15 below or as required by
law including federal securities laws, the parties agree not to make any
public statement regarding your separation from employment with the
Company beyond the information contained in the Press
Release.
|
|
|
4.
|
Subject
to this Agreement becoming effective and subject to your continued
compliance with Sections 5, 6 and 7 of the Employment Agreement and the
provisions of this Agreement (including without limitation your
obligations to provide assistance to the Company under Section 2 hereof
after the Effective Date), the Company agrees to pay you or provide to
you, as the case may be: (i) salary continuation at the rate of $410,000
per annum for the twelve (12) month period commencing on the Effective
Date, which shall be payable in twenty-four (24) semi-monthly installments
in accordance with the Company’s normal payroll practices; (ii) the amount
of your accrued unpaid salary and accrued unused vacation days (which
vacation days total $6,534.87) through the Effective Date, which will be
paid on March 31, 2009; (iii) 132,473 shares of the Company’s common stock
in full settlement of your RSUs, which will be delivered on the Effective
Date and 9,949.27 phantom shares of the Company’s common stock, which will
be settled in cash on the Effective Date at the fair market value of the
shares on the Effective Date; (iv) continuation for the twelve (12) month
period commencing on the Effective Date of individual term life, group
life, disability, sickness, hospitalization and accident insurance
benefits equivalent to those to which you would have been entitled if you
had continued working the Company during such period; and (v) any benefits
required to be paid or provided under XxxXxxxxx.xxx, Inc. 401k Savings
Plan in accordance with the terms thereof. For the avoidance of
doubt, it is understood and agreed that no amounts are owed to you with
respect to any “annual bonus” (as defined in the Employment Agreement) and
that no stock-based compensation is owed to you other than the 132,473
shares of the Company’s common stock and 9,949.27 phantom shares of the
Company’s common stock described in clause (iii) above and shares of the
Company’s common stock deliverable to you upon your exercise of
outstanding stock options to the extent hereafter exercised in accordance
with the terms of your award agreements. You acknowledge that
any shares of the Company’s common stock issued to you pursuant to this
Agreement or otherwise remain subject to applicable federal and state
securities laws, and you will consult with your own counsel regarding any
transactions involving the Company’s securities. All amounts
payable under this Agreement shall be subject to applicable
withholding.
|
|
|
For
purposes of assisting you in complying with Section 5 of the Employment
Agreement, the Company agrees that you shall have the right to submit a
written request to the Company for a determination that an activity in
which you propose to engage will not be considered by it to constitute
“competition” (as defined in Section 5 of the Employment
Agreement). The Company agrees to respond to such request
within ten (10) days of receipt thereof but reserves the right, in its
sole and absolute discretion, to approve or reject any such request and in
its sole and absolute discretion to impose such conditions on any approval
as it sees fit.
|
|
|
5.
|
In
the event that the Company determines in its reasonable judgment that on
or after the date hereof and prior to the Effective Date, you have engaged
in any act or omission constituting Cause as defined in Section 4(a) of
the Employment Agreement which act or omission has not been cured, if
curable, within 24 hours following written notification thereof by the
Company, this Agreement shall become null and void, and the only
obligations that the Company shall have to you are those that are set
forth in Section 4(a) of the Employment
Agreement.
|
|
|
6.
|
In
consideration of the payments and benefits provided to you under this
Agreement and after consultation with counsel, you and each of your
respective heirs, executors, administrators, representatives, agents,
successors and assigns (collectively the “Xxxxxx Parties”) hereby
irrevocably and unconditionally release and forever discharge the Company
and its subsidiaries and affiliates and each of their respective officers,
employees, directors, managers, shareholders and agents (collectively, the
“Company Parties”), from any and all claims, actions, causes of action,
rights, judgments, fees and costs (including attorneys’ fees),
obligations, damages, demands, accountings or liabilities of whatever kind
or character (collectively, “Claims”), including, without limitation, any
Claims based upon contract, tort, or under any federal, state, local or
foreign law, including but not limited to, any claims under Title VII of
the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 1981, the
Americans with Disabilities Act, as amended, the Family and Medical Leave
Act, as amended, the Employee Retirement Income Security Act of 1974, as
amended, the Civil Rights Act of 1991, as amended, and the Consolidated
Omnibus Budget Reconciliation Act (COBRA), as amended, that the Xxxxxx
Parties may have, or in the future may possess, that occurred, existed or
arose on or prior to your execution of this Agreement; provided, however,
that you do not release, discharge or waive (i) any rights to payments and
benefits provided under this Agreement, (ii) any rights you may have to
enforce this Agreement or Sections 5 through 9, 13 through 15 and 21
through 26 of the Employment Agreement, or (iii) your eligibility for
indemnification in accordance with the Company’s certificate of
incorporation, bylaws or other corporate governance document, or any
applicable insurance policy, with respect to any liability you incurred or
might incur as an employee, officer or director of the Company, including,
without limitation, pursuant to Section 22 of the Employment
Agreement.
|
In
further consideration of the payments and benefits provided to you under this
Agreement, the Xxxxxx Parties hereby unconditionally release and forever
discharge the Company Parties from any and all Claims that the Xxxxxx Parties
may have as of the date of your execution hereof arising under the Federal Age
Discrimination in Employment Act of 1967, as amended, and the applicable rules
and regulations promulgated thereunder (“ADEA”). By signing this
Agreement, you hereby acknowledge and confirm the following: (i) you were
advised by the Company in connection with your separation to consult with an
attorney of your choice prior to signing this Agreement and to have such
attorney explain to you the terms of this Agreement, including, without
limitation, the terms relating to your release of claims arising under ADEA, and
you have in fact consulted with an attorney: (ii) you were given a period of not
fewer than twenty-one (21) days to consider the terms of this Agreement and to
consult with an attorney of your choosing with respect thereto although you are
free to sign the Agreement at any time during this period; and (iii) you
knowingly and voluntarily accept the terms of this Agreement. You
also understand that you have seven (7) days following the date hereof within
which to revoke the release contained in this paragraph, by providing the
Company a written notice of your revocation of the release contained in this
paragraph.
You
represent and warrant that you have not assigned any of the Claims being
released under this Agreement and that you have not filed any complaint, charge,
claim or proceeding against any of the Company Parties before any local, state
or federal agency, court or other body (each, individually, a
“Proceeding”).
You
acknowledge and agree that the remedy at law available to the Company for itself
and on behalf of the Company Parties for breach of any of your post-termination
obligations under the Employment Agreement or your obligations under this
Agreement would be inadequate and that damages flowing from such a breach may
not readily be susceptible to being measured in monetary
terms. Accordingly, you acknowledge, consent and agree that, in
addition to any other rights or remedies that the Company may have at law or in
equity, the Company shall be entitled to seek a temporary restraining order or a
preliminary or permanent injunction, or both, without bond or other security,
restraining you from breaching your post-termination obligations under the
Employment Agreement or your obligations under this Agreement. The
parties hereby irrevocably submit to the exclusive jurisdiction of any New York
State or Federal court sitting in the City of New York for any injunctive relief
sought as permitted herein and waive the defense of inconvenient forum to the
maintenance of any such injunctive proceeding.
|
|
7.
|
Subject
to this Agreement becoming effective, the Company hereby irrevocably and
unconditionally releases and forever discharges the Xxxxxx Parties from
any and all Claims, including, without limitation, any Claims based upon
contract, tort, or under any federal, state, local or foreign law, that
the Company Parties may have, or in the future may possess, arising out of
any aspect of your employment relationship with and service as an
employee, officer, director, manager or agent of the Company or any of its
subsidiaries, or the termination of such relationship or service, that
occurred, existed or arose on or prior to the Company’s execution of this
Agreement, excepting any Claim which would constitute or result from
conduct by you that could constitute the basis for termination for Cause
under Section 4(a) of the Employment Agreement or could be a crime of any
kind. Anything to the contrary notwithstanding in this
Agreement, nothing herein shall release you or any other Xxxxxx Party from
any Claims based on any right the Company may have to enforce this
Agreement or Sections 5 through 9, 13 through 15 and 21 through 26 of the
Employment Agreement.
|
|
|
The
Company represents and warrants that it has not assigned any of the Claims
being released under this Agreement and that it has not filed any
Proceeding relating to your employment or the termination
thereof.
|
|
|
8.
|
This
Agreement, including the waivers and releases contained herein, shall
become effective on the eighth (8th) day following your execution of this
Agreement, provided that you have not given written notice of revocation
of the Agreement prior to such day (the “Effective Date”). If
you revoke this Agreement prior to the eighth (8th)
day following your execution of this Agreement, all of the provisions of
this Agreement shall be null and
void.
|
|
|
9.
|
Subject
to Section 6 hereof, the parties agree that any and all disputes arising
out of the terms of this Agreement and any surviving terms of the
Employment Agreement shall be subject to binding arbitration in the City
and County of New York before the American Arbitration Association under
its National Rules for the Resolution of Employment
Disputes. Any award rendered by the arbitrator may be entered
in any court having jurisdiction
thereof.
|
|
|
10.
|
Your
rights and duties under this Agreement are not assignable by you other
than as a result of your death. In the event of your death,
your rights under this Agreement will inure to the benefit of your estate
and heirs. None of your rights under this Agreement shall be
subject to any encumbrances or the claims of your
creditors. This Agreement shall be binding upon and inure to
the benefit of the Company and any successor organization which shall
succeed to the Company by merger or consolidation or operation of law, or
by acquisition of all or substantially all of the assets of the
Company. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
shall constitute the same
instrument.
|
|
|
11.
|
This
Agreement shall be governed by and subject to the laws of the State
of New York without giving effect to conflict of law
rules.
|
|
|
12.
|
This
Agreement (and its incorporation and/or modification of certain terms of
the Employment Agreement as set forth herein) contains a complete
statement of all the arrangements between you and the Company with respect
to your employment and the cessation of your employment and
directorship. This Agreement may not be changed
orally. No other promises or agreements shall be binding unless
in writing and signed by the Company and
you.
|
|
|
13.
|
Unless
otherwise provided herein, any notice, exercise of rights or other
communication required or permitted to be given hereunder shall be in
writing and shall be given by overnight delivery service such as Federal
Express, telecopy (or like transmission) or personal delivery against
receipt, or mailed by registered or certified mail (return receipt
requested), to the party to whom it is given at such party’s address set
forth below such party’s name on the signature page or such other address
as such party may hereafter specify by notice to the other party
hereto. Any notice or other communication shall be deemed to
have been given as of the date so personally delivered or transmitted by
telecopy or like transmission if delivered or transmitted during regular
business hours and otherwise on the next business day or on the next
business day when sent by overnight delivery
service.
|
|
|
14.
|
Nothing
contained in this Agreement shall be construed as an admission by the
Company or you of any wrongdoing or any liability
whatsoever.
|
|
|
15.
|
The
parties acknowledge and agree that neither party will be considered to
have breached its non-disparagement obligations under the Employment
Agreement or its obligations under Section 3 of this Agreement by making,
publicly or privately, the following statement: “After ten (10) years of
service, which the Company appreciates, [Tom’s][my] separation was
determined to be in the best interests of all parties.” Except as
permitted under Section 3 of this Agreement, nothing more will be said by
either party with respect to any aspect or circumstances of your
separation.
|
|
|
16.
|
On
or prior to the Effective Date, you will deliver to the Company all
non-personal documents and data of any nature, and in whatever medium,
concerning your employment with the Company or any of its subsidiaries and
will return to the Company all property of the Company in your possession,
including without limitation laptop computers, blackberries, cell phones,
credit cards and key cards.
|
|
|
17.
|
If
any term or provision of this Agreement shall be determined to be invalid
or unenforceable to any extent or in any application, then the remainder
of this letter shall be unaffected thereby and shall be valid and
enforceable.
|
If this
letter correctly sets forth our agreement, please execute a counterpart copy
where indicated below.
|
Sincerely
yours,
|
|||
|
XXXXXXXXX.XXX,
INC.
|
|||
|
By:
|
/s/XXXXX XXXXX | ||
|
Xxxxx
Xxxxx
|
|||
|
Director,
Member of Compensation Committee
|
|||
|
Dated: March
13, 2009
|
|||
|
Address:
|
00
Xxxx Xxxxxx
|
||
|
Xxx
Xxxx, XX 00000
|
|||
|
Telephone
No.:
|
(000)
000-0000
|
||
|
Telecopy
No.:
|
(000)
000-0000
|
||
|
With
a copy to:
|
|||
|
Xxxxxx
Xxxxxxx & Xxxx, LLP
|
|||
|
Xxx
Xxxxxxx Xxxx Xxxxx
|
|||
|
Xxx
Xxxx, XX 00000
|
|||
|
Attention: Xxxxxxx
Xxxxxxxxx
|
|||
ACCEPTED
AND AGREED TO
/s/ XXXXXX X. XXXXXX
Xxxxxx X.
Xxxxxx, Xx.
Dated: March
13, 2009
Address: 00
Xxxxxx Xxxxxx
Xxxxx
Xxxxx, XX 00000
With a
copy to:
Xxxxxxx
& Xxxxxxxx
000 Xxxx
00xx
Xxxxxx
Xxx Xxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxx