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EXHIBIT 10.48
SEPARATION AGREEMENT AND RELEASE
Separation Agreement and Release, made this day of December, 2000 (this
"Agreement"), by and between Credit Store, Inc., a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxx (the "Employee").
RECITALS
WHEREAS, pursuant to an Employment Agreement dated as of March 27, 1997
(the "Employment Agreement"), by and between the Employee and the Company,
Employee has served as Chief Executive Officer and Chairman of the Board of
Directors of the Company;
WHEREAS, the Audit Committee of the Board of Directors (the "Audit
Committee") is engaged in an inquiry (the "Audit Committee Inquiry") with the
advice and assistance of its counsel (the "Audit Committee Counsel") into
certain financial matters and questions concerning or relating to Employee;
WHEREAS, Employee has said that he will cooperate with the Audit
Committee and its counsel with respect to the Audit Committee Inquiry and
provide such documents, information, verification, and other information as the
Audit Committee or Audit Committee Counsel may reasonably require;
WHEREAS, Employee resigned as a director, officer and employee of the
Company on September 21, 2000 (the "Termination Date"); and
WHEREAS, the Company and Employee have agreed that it is in their
respective best interests to provide for the parties' rights and obligations
with respect to each other with respect to the separation.
NOW, THEREFORE, in consideration of these premises and the mutual
agreement of the parties, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Employee and the
Company agree as follows:
1. Definitions. For the purposes of this Agreement the following terms
have the meanings set forth below:
1.1 "Consultant" means each individual corporation,
partnership, limited liability company and other entity that, as
an independent contractor, was paid compensation for advice or
other services (except legal and accounting services) rendered,
or contracted to be rendered, to the Company at any time during
the three year period ended September 31, 2000.
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1.2 "Employee Business Expenses" means all sums paid by
the Company or reimbursed to Employee for expenses of Employee
during the period of his employment (including all sums charged
to the Company on Employee's corporate credit card).
1.3 "Employee Personal Credit Card Indebtedness" means
$504,801.30 ($525,025.51 reduced by $20,224.21, Employee's net
bonus for fiscal 2000) , plus interest accrued after 12/11/00,
being Employee's indebtedness to the Company on his personal
Master Card credit card, card number 0000 000 000 000000.
1.4 "Employee Legal Fee Advance" means $25,000, being the
amount to be paid and advanced on Employee's behalf to Xxxxxxx
Berlin Shereff Xxxxxxxx, LLP on account of legal fees for
services provided to Employee in connection with the Audit
Committee Inquiry and the preparation of this Agreement.
1.5 "Employee Personal Indebtedness" means the sum of
Employee Personal Credit Card Indebtedness, Employee Taxes and
Employee Legal Fee Advance.
1.6 "Employee Severance Payments" means all payments
payable to Employee under Sections 6.1 and 6.2 hereof.
1.7 "Relevant Expenditures" means all Employee Business
Expenses, Third Party Benefits and all other benefits provided to
Employee and payments made to or for the account of Employee
which were not reported and treated as taxable income to Employee
for the year so provided or paid to Employee.
1.8 "Employee Taxes" means all income taxes, interest and
penalties on any and all Relevant Expenditures which any taxing
authority determines or deems to be compensation.
1.9 "Third Party Benefits" means all payments, expense
reimbursements and other benefits received by Employee during the
period of his employment with the Company from any Consultant.
2. Termination Benefits. In lieu of any and all compensation and
benefits to be received under the Employment Agreement, or otherwise, from
and after the Termination Date Employee is entitled to the compensation and
benefits expressly set forth in this Agreement, and no other.
3. Employee Representations. Employee makes the representations to
the Company as set forth below.
3.1 All Employee Business Expenses were proper business
expenses, necessarily and reasonably incurred by Employee in
furtherance of his duties for the Company.
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3.2 Employee received no Third Party Benefits that were
for, or in consideration of, or dependant upon, (i) any contract
agreement or arrangement between a Consultant and the Company, or
(ii) any payment or other benefit or consideration received by a
Consultant from the Company.
4. Certain Covenants. Employee covenants and agrees to the matters
set forth below.
4.1 Employee will cooperate with the Audit Committee and
Audit Committee Counsel with respect to the Audit Committee
Inquiry. Without limiting the forgoing, Employee will (i) appear
before the Audit Committee and its counsel at reasonable times
and on reasonable notice, (ii) provide any and all documentation
in his possession or under his control or reasonably obtainable
by him and information and explanations reasonably requested of
Employee with respect to or bearing on Employee Business
Expenses, Third Party Benefits, if any, and representations of
Employee under section 3 hereof, and
4.2 Employee will use his reasonable commercial efforts to
cause or encourage consultants to cooperate with the Audit
Committee and Audit Committee Counsel with respect to the Audit
Committee Inquiry.
5. Termination of Rights. Employee's rights and benefits under
sections 6 and 8.2 hereof shall terminate forthwith if Employee shall be in
material breach of his covenants under section 4 hereof.
6. Payments and Other Consideration to Employee. In consideration
of the agreements contained herein, the Company shall provide to Employee
the benefits set forth below.
6.1 Severance payments through March 26, 2002. Commencing
on September 29, 2000, and continuing through March 26, 2002, the
Company shall pay Employee $2,500 every other week of each month.
6.2 Bonus Payments. Within the thirty (30) day period
immediately following the Company's receipt of its certified
financial statements (the "Financial Statements") for each of the
fiscal years ended May 31, 2001 and May 31, 2002, the Company
shall pay Employee a lump sum cash bonus (the "Bonus"), in an
amount equal to one and one-half percent (1 1/2%) of the
Company's annual pre-tax net earnings as reflected in the
applicable Financial Statements. The Employee acknowledges that
the Bonus otherwise payable with respect to the fiscal year ended
May 31, 2002 shall be prorated, and accordingly in lieu of such
Bonus Employee shall be entitled to receive a lump sum cash bonus
in amount equal to the product of 10 times the Bonus, divided by
12.
6.3 Options. The parties agree that the Employee shall
retain options to purchase1,000,000 shares of the Company's
common stock, par value $.001 per share, exercisable at a price
of $2.00 per share (the "Employee Options"), as set forth in the
Non-Qualified Stock Option Agreement, dated as of December 15,
1997, between the Company and Employee (the "Option Agreement").
The parties acknowledge that, pursuant to the Option Agreement,
all of the Employee
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Options are vested as of the date hereof and may be exercised at
any time until and including December 15, 2002.
6.4 Non-qualified Deferred Compensation. Employee shall be
entitled to continue to participate in the Company's 401-K Plan
through and until December 31, 2000. However, no further
contributions into the plan shall be made either by the Company
or the Employee. The Employee may withdraw money from his account
under the plan in accordance with the terms of the plan and shall
withdraw all amounts no later than March 26, 2002.
6.5 Health Insurance. At a cost to the Company of not in
excess of $12,000 per year, the Company shall provide the
Employee with health insurance for himself comparable to that
which is provided to senior executives of the Company from the
Termination Date through March 26, 2002. The Employee shall be
responsible to contribute for such insurance, payment in an
amount equal to that paid by other senior executives of the
Company for such comparable coverage. If applicable and to the
extent permitted by law, after March 26, 2002, the Employee may
continue his health insurance as provided by COBRA, at his
expense.
6.6 Employee Legal Fee Advances. Upon the execution of
this Agreement, the Employee Legal Fee Advance shall be paid by
the Company.
7. Certain Obligations. Employee covenants and agrees to each of
the matters set forth below.
7.1 Employee Personal Indebtedness and Security Agreement.
Employee will pay and discharge in full and in a timely manner
all Employee Personal Indebtedness. The sum of the Employee
Personal Credit Card Indebtedness and Employee Legal Fee Advance
(aggregating to $529,801.30) shall be evidenced by and paid in
accordance with Employee's promissory note, being executed and
delivered simultaneously herewith (the "Employee Note"). The
Employee Note will bear interest at the rate of 8% per annum,
payable monthly, and will mature on December 1, 2002.
7.2 Security Agreement. To insure payment of the Employee
Note and the indebtedness evidenced thereby, simultaneously
herewith, Employee will sign a security agreement, in form
approved by the Company (the "Security Agreement"), granting a
security interest to the Company in the Employee Severance
Payments and Employee Options and any shares or proceeds received
upon the exercise of the Employee Options (the "Collateral"). For
the purpose of filing the Security Agreement, Employee represents
that he resides at 0000 Xxxxxxxxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 . Employee will inform the Company in writing
within five business days of any change in his residence.
Employee represents and warrants that prior to the date hereof he
has not sold, assigned or in any way transferred the Collateral
to an unaffiliated third party. Upon request of the Company, at
any time and from time to time, Employee will do, execute,
acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds,
assignments, transfers, conveyances and assurances as may be
necessary to better grant or perfect in the Company a security
interest in the Collateral.
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7.3 Right of Set-Off. While the Employee Note remains
outstanding and unsatisfied or there shall be outstanding and
unsatisfied any Employee Taxes all Employee Severance Payments
shall be applied, directly, to the payment thereof. Without the
Company's consent, Employee may not sell, transfer or exercise
the Employee Options while there shall be and remain outstanding
any Employee Personal Indebtedness (and the Company shall not be
required to recognize or implement any such transfer or exercise,
whether voluntary or involuntary). Notwithstanding the foregoing,
the Company will not unreasonably withhold its consent to a
proposed sale and transfer of the Employee Options to an
unaffiliated third party in an arms-length transaction if all or
substantially all of the proceeds of such transaction are paid
over to the Company on account of the Employee Note.
7.4 Employee Taxes. Employee (i) promptly shall pay all
"Employee Taxes", (ii) promptly shall file any required tax
returns with respect thereto, and (iii) shall, and does hereby,
indemnify the Company from and against any cost or expense for
Employee Taxes, or arising in connection therewith.
7.5 Company Property. Employee will return to the Company
all Company property in his use or possession including, but not
limited to, computer equipment, Company credit cards, and any
documents generated, owned or containing information obtained in
any form from the Company.
8. Releases.
8.1 By Employee. Subject to Employee's rights to
indemnification under the Company's Charter, By Laws and
applicable law and to the Company's covenants, agreements and
obligations herein contained or provided, Employee, on behalf of
himself and others claiming by, through, or under him, hereby
voluntarily and knowingly, fully and forever, releases,
discharges, acquits and relinquishes the Company and its
affiliates and subsidiaries, and its present and former officers,
directors, employees, agents, representatives, stockholders,
partners and members, both individually and in their official
capacities with the Company and its subsidiaries and affiliates
(the "Company Released Parties") from any and all charges,
claims, actions, lawsuits, promises, agreements, judgments,
liabilities, demands, causes of action, and/or damages, of
whatever kind or character, whether known or unknown, suspected
or unsuspected, pending or threatened, which are related to any
matter, fact or event that has occurred at any time prior to the
date of this Agreement which the Employee may now have or
hereafter can or may have against the Company Released Parties.
The Employee is aware that he is releasing claims as to which he
may be currently unaware and only may come to learn, but is
nevertheless willing to enter this release.
8.2 By Company. In reliance upon Employee's
representations under section 3 hereof and subject to Employee's
covenants, agreements and obligations herein contained or
provided, the Company Released Parties, on behalf of themselves
and others claiming by, through, or under them, hereby
voluntarily and knowingly, fully and forever, release, discharge,
acquit and relinquish Employee and the Employee's respective
legal counsel, heirs, successors,
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agents and assigns, from any and all charges, claims, actions,
lawsuits, promises, agreements, judgments, liabilities, demands,
causes of action, and/or damages, of whatever kind or character,
currently known to the Audit Committee of the Company's Board of
Directors (including the matters covered by Employee's
representations herein if such representations are not untrue in
any material respect), which are related to any matter, fact or
event that has occurred at any time prior to the date of this
Agreement which the Company Released Parties may now have or
hereafter can or may have against Employee.
9. Obligation With Respect to Taxes. The Company shall have the
right to deduct from payments made and benefits provided under this
Agreement all withholding taxes as required by law. Employee agrees to pay
all taxes that are required by law to be paid (in excess of amounts
withheld) with respect to amounts and benefits he receives under this
Agreement. In addition to his obligations under Section 7.4 hereof,
Employee further expressly agrees to pay all taxes not previously paid, if
any, (and interest and penalties, if applicable) on all sums and benefits
heretofore paid or provided to him by the Company during the course of his
employment and Employee does hereby indemnify the Company against any cost,
expense or liability with respect thereto.
10. Further Assurances. The parties hereto agree to execute and
deliver any and all other documents, releases or claims, instruments,
agreements and other writings that may be reasonably requested to
effectuate the Agreement and the undertakings herein contained.
11. Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand, electronic transmission (with
a copy following by hand or by overnight courier), by registered or
certified mail, postage prepaid, return receipt requested or by overnight
courier addressed to the other party. All notices shall be addressed as
follows, or to such other address or addresses as may be substituted by
notice in writing:
To the Company:
Credit Store, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attention: President
To Employee:
Xxxxxx X. Xxxxx
0000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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with a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Communications delivered by hand or by overnight courier shall be deemed
received on the date of delivery; communications sent by electronic means
shall be deemed received one (1) business day after the sending thereof,
and communications sent by registered or certified mail shall be deemed
received three (3) business days after the sending thereof.
12. Knowledge and Consent of the Parties. The parties hereby
mutually warrant and represent that they have read and understand this
Agreement and that this Agreement is executed voluntarily and without
duress or undue influence on the part of or on behalf of any party hereto.
The parties hereby acknowledge that they have been represented in
negotiations and for the preparation of this Agreement by counsel of their
own choice, that they have read this Agreement, and that they are fully
aware of the contents of this Agreement and of the legal effect of each and
every provision hereof. It is acknowledged and agreed by each party to this
Agreement that each party has participated in the drafting of this
Agreement and that any claimed ambiguity should not be construed for or
against any such party on account of such drafting.
13. Legal Construction. If any provision contained in this
Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision will be modified to the extent
necessary to permit it to be enforceable, and the remaining provisions of
this Agreement will continue to be in force.
14. Entire Agreement/Binding Effect. Except as otherwise
specifically amended, modified, or superseded by provisions in this
Agreement, the Option Agreement shall remain in full force and effect. Any
other prior oral or written agreements between the Employee and the Company
are hereby terminated and shall have no further force and effect. This
Agreement is binding upon the heirs and personal representatives of the
Employee, and upon the successors and assigns of the Company.
15. Amendments; Waiver. The terms of this Agreement may be
changed, modified or discharged only by an instrument in writing signed by
the parties hereto. A failure of a party to insist on strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision hereof.
16. Governing Law; Jurisdiction. This Agreement shall be governed
and construed in accordance with the internal laws of the State of New
York. The parties hereto agree to submit to
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jurisdiction in the State of New York and agree not to contest the sole
jurisdiction of said courts over interpretation and enforcement of this
Agreement as well as the applicability of New York law.
17. Fees and Expenses. Except as expressly provided herein, if
either party institutes any action or proceeding to enforce any rights the
party has under this Agreement, or for damages by reason of any alleged
breach of any provision of this Agreement, or for a declaration of each
party's rights or obligations hereunder or to set aside any provision
hereof, or for any other arbitral or judicial remedy, each party shall be
responsible for its own costs and expenses incurred thereby, including but
not limited to, attorneys' fees and disbursements.
18. Headings. The section headings contained in this Agreement are
for the convenience of reference only and shall not affect the construction
of any provision of this Agreement.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Separation Agreement
and Release on the _____ day of December, 2000, as of the date first written
above.
CREDIT STORE, INC.
By:
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Name:
Title:
EMPLOYEE
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Xxxxxx X. Xxxxx
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