EXHIBIT 10.9 -- SEPARATION AGREEMENT BETWEEN INCOMNET, INC. AND
XXXXXX X. XXXXXXXXX, DATED JULY 1, 1998 AND
AMENDMENT THERETO DATED OCTOBER 30, 1998
NATIONAL TELEPHONE & COMMUNICATIONS, INC.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
October 30, 1998
BY FACSIMILE:
Xx. Xxxxxx X. Xxxxxxxxx
0 Xxx Xxxxxx
Xxxx Xx Xxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxxxxxxx:
This letter, when countersigned by you, will constitute an agreement
between you and the Company as to the revised terms of your separation
arrangements with National Telephone & Communications, Inc. (the "Company").
1. In lieu of the severance payments provided under Section 2 of your
Confidential Separation Agreement, entered into as of July 1, 1998 (the
"Separation Agreement"), you shall receive a lump sum payment of $52,016 on or
before December 15, 1998.
2. The provisions in Section 2 of the Separation Agreement relating to
the continuation of medical coverage under COBRA shall remain in full force and
effect.
3. In lieu of the $75,000 bonus provided for under Section 7 of your
Separation Agreement, the Company shall pay to you a lump sun of $37, 500 but
only in the event that one of the following occur on or before July 1, 2000:
(i) a merger to which the Company is a party and in which Incomnet, Inc. or its
shareholders retain less than 50% interest in the Company, (ii) a sale of
substantially all of the Company's assets, or (iii) a public offering of the
Company's Common Stock.
4. All your obligations to provide continuing services under paragraph
8 of Separation Agreement shall terminate on December 15, 1998.
5. All your obligations to refrain from competing against the Company
set forth in Section 12.0 of your Amended and Restated Employment Agreement
dated June 25, 1997, shall terminate on December 15, 1998.
6. If the Company defaults on its payment obligations set forth herein,
you shall be entitled to all rights under the Separation Agreement.
Please acknowledge your agreement to the terms set forth in this letter by
signing below where indicated and return it to me by facsimile. This offer
expires at 5:00 p.m. on October 30, 1998. You may fax your acceptance to the
undersigned at (000) 000-0000.
Very truly yours,
/s/ Xxxxx Xxxxxxx
-----------------
President and Chief Executive Officer
AGREED AND ACCEPTED
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxxx
CONFIDENTIAL SEPARATION AGREEMENT
THIS CONFIDENTIAL SEPARATION AGREEMENT ("Agreement") is made and
entered into as of July 1, 1998, (the "Date of this Agreement") by and between
Xxxxxx X. Xxxxxxxxx ("Employee") and National Telephone & Communications, Inc.,
a California corporation (the "Company") (collectively, the "Parties").
RECITALS
A. Employee is currently employed by the Company as Chief Financial
Officer, pursuant to an Agreement dated June 25, 1997, (the "Employment
Agreement").
B. Under the terms of the Employment Agreement, Employee is entitled to
resign for "Good Cause" and receive substantial payments in the event of a
change in control of the Company or its parent, Incomnet, or in the event of his
termination by the Company, other than for cause.
C. Employee and the Company desire to specify the terms of Employee's
continuing his employment with the Company and separation therefrom, without
subjecting the Company to liability under the Employment Agreement for
termination by the Company other than for cause, or termination by the Employee
for "Good Cause."
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. TERM OF EMPLOYMENT. Employee shall continue his employment with
the Company through July 31, 1998. Employee shall continue to receive all
compensation and benefits in accordance with the terms of the Employment
Agreement through July 31, 1998. Neither party may terminate the employment
relationship during that period, except that in the event that a new Chief
Financial Officer is retained prior to that date, Employee may terminate
employment at his option. After August 31, 1998 (unless Employee has elected
to terminate his employment if a new Chief Financial Officer is retained
prior to that date), Employee shall continue to be employed on an "at-will"
basis which means that either party may terminate the employment relationship
at any time, with or without cause and with or without notice.
2. SEVERANCE PAYMENT. After the termination of employment, the
Company shall pay Employee $10,000 monthly for a period of 12 months, payable
on a bi-weekly basis, commencing on the last regular Company payday of the
month following the month in which Employee's employment is terminated. So
long as Employee makes a timely election, the Company shall also make
Employee's payments for continuing his current medical coverage under COBRA
upon termination of his employment for the lesser of 6 months or the date on
which Employee is eligible for coverage under a subsequent employer's medical
care plan.
3. RELEASES. Concurrently with the execution of this Agreement,
Employee will execute a release of all claims against the Company in the form
attached hereto as Exhibit "A." This Agreement shall be null and void in its
entirety if Employee fails to execute a release of all claims in the form
attached hereto as Exhibit "A." Said release shall be null and void in its
entirety in the event the Company fails to make any payment required under
Section 2 above after the Company has received written notice of its alleged
failure to make any such payment and has failed thereafter to make such
payment within fifteen business days. Concurrently with the execution of this
Agreement, the Company shall execute a release of claims in the form
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attached hereto as Exhibit "B." In the event that the Company fails timely to
execute the release in the form attached hereto as Exhibit "B," this Agreement
shall be null and void in its entirety.
4. SEVERABILITY. The provisions of this Agreement are severable,
and if any part of it is found to be unenforceable, the other paragraphs
shall remain fully valid and enforceable.
5. ATTORNEYS' FEES. The Company shall reimburse Employee up to
$7,500.00 for attorneys' fees incurred in connection with the negotiations
and drafting of this Agreement. Payment shall be made within thirty (30) days
of the receipt of a xxxx(s) for such services. This amount shall be reduced
by any amount paid on behalf of Xxxxx Xxxxxx in connection with the
negotiation and drafting of his separation agreement.
6. INDEMNIFICATION. The Company shall defend and indemnify Employee
in connection with any and all claims arising out of or related to his
service as an employee, officer or director of the Company, to the fullest
extent permitted under and subject to any conditions required by applicable
law; and the Company shall take any and all actions necessary to permit such
indemnification. With respect to any claim for which the Company has in
effect Director and Officer Insurance coverage which actually provides
coverage for such claim to Employee, the Company's obligation hereunder shall
be satisfied to the extent such coverage reimburses Employee for or pays for
Employee's defense or liability in connection with such claim; however, any
uncovered amount shall be paid by the Company. Any obligation of the Company
to indemnify Employee is conditioned upon Employee's reasonable cooperation
with the Company in the defense of any matter subject to this
indemnification. Employee's duty to cooperate with the Company in the defense
of any claims asserted against the Company shall exist both during and
following Employee's employment by the Company. Employee shall, upon
reasonable notice, and subject to Employee's other professional commitments
or employment obligations, furnish such information and assistance to the
Company as may
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reasonably be required by the Company in connection with any litigation or
governmental investigation in which it or any of its subsidiaries or
affiliates, is, or may become, a party. If Employee is a party in any action,
Employee shall not be entitled to any additional compensation for furnishing
such information and assistance pursuant to this Article. If Employee is not
a party in any such action and is no longer an Employee of the Company or
receiving compensation from the Company pursuant to Section 8 of this
Agreement or otherwise, Employee shall be paid a reasonable consulting fee
for his services. The Company shall maintain in force for a period of not
less than two (2) years following the date of Employee's termination of
employment, Director and Officer Insurance coverage on substantially the same
terms as currently in force, and at the present levels of coverage, provided
coverage is available at commercially reasonable rates.
7. BONUS. In the event that the Company or a successor in interest
makes a public offering of securities, is acquired, or all or substantially
all of its assets are acquired within two years of July 1, 1998, within
thirty (30) days of such event Employee shall be paid $75,000 by the Company.
8. CONTINUING SERVICE. For a period of six (6) months following his
termination of employment, Employee shall be available by telephone not more
than 2 hours per week to consult with the Company concerning his knowledge of
the Company's business or operations during his period of Employment. Unused
hours from one week shall not roll over to any subsequent period. The failure
of the Company to utilize any or all of the hours Employee is available per
week shall not excuse or reduce the amount due hereunder. Employee shall be
paid $1,200 per month for such services, payable on the last day of the month
in which such services are rendered. The Company may terminate this
consulting arrangement prior to the end of the six (6) month period upon
written notice to Employee.
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9. NO ADMISSION. Nothing contained in this Agreement shall be
construed in any way as an admission by the Company or Employee that it or he
has acted wrongfully with respect to the other or with respect to any other
person, and the Company or Employee specifically disclaims any liability to,
or wrongful acts against the other, on the part of itself or its or his
representatives, affiliates, associates, employees or agents.
10. NO CLAIMS. Employee and the Company represent and agree that he
and it have not filed any notices, complaints, charges or lawsuits of any
kind whatsoever against the other with any court, any governmental agency or
any other regulatory body, and will not do so at any time hereafter with
regard to any matter related to or arising out of Employee's employment by
the Company or its affiliates, or his resignation thereof; provided, however,
that the foregoing shall not preclude or limit Employee or the Company in any
way from enforcing his or its rights under this Agreement or from taking any
actions required by law to be taken by him or it, nor shall this Agreement
prohibit Employee from seeking unemployment compensation which the Company
will not contest, provided the claim is lawful.
11. ARBITRATION. Except for claims for temporary or preliminary
equitable or injunctive relief that could not practicably be heard in a
timely fashion through this arbitration process, the parties hereby agree to
submit any claim or dispute arising out of the terms of this Agreement
(including exhibits) and/or any dispute relating in any way to Employee's
employment with the Company to private and confidential arbitration by a
single neutral arbitrator. Subject to the terms of this paragraph, the
arbitration proceedings shall be governed by the then current JAMS Employment
Arbitration Rules, and shall take place in Orange County, California. The
arbitrator shall be selected as follows: JAMS shall provide the parties with
a list of eleven (11) arbitrators drawn from its panel of employment dispute
arbitrators; each party may strike all names on the list it deems
unacceptable. If only one common name remains on the lists of all parties,
that individual shall be designated as the arbitrator. If more than one common
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name remains on the lists of all parties, the parties shall strike names
alternately from the list of common names until only one remains. The party
who did not initiate the claim shall strike first. If no common name exists
on the lists of the parties, then the parties shall strike alternately from
a second list, with the party initiating the claim striking first, until only
one name remains. That person shall be designated as the arbitrator. The
decision of the arbitrator shall be final and binding on all parties to this
Agreement, and judgment thereon may be entered in any court having
jurisdiction. The Company will advance the arbitrator's fee; however, all
costs of the arbitration proceeding or litigation to enforce this Agreement,
including attorneys' fees and witness expenses, shall be paid by the party
against whom the arbitrator or court rules. Except for claims for temporary
or preliminary equitable or injunctive relief that could not practicably be
heard in a timely fashion through this arbitration process, this arbitration
procedure is intended to be the exclusive method of resolving any claim
relating to the obligations set forth in this Agreement (including Exhibits
"A" and "B").
12. ENTIRE AGREEMENT. This Agreement represents the sole and entire
agreement among the parties and supersedes all prior agreements,
negotiations, and discussions between the parties hereto and/or their
respective counsel with respect to the subject matters covered hereby,
including without limitation, any obligations of the Company to Employee and
Employee to the Company under the Employment Agreement; provided, however,
that in the event the Company fails to make timely payments of the amounts
set forth in Section 2 hereof, and Employee's release has become null and
void as provided in Section 3 hereof, Employee shall be entitled to seek
recovery under paragraphs 10.3 and 10.4 of the Employment Agreement in
accordance with the terms thereof. Any amendment to this Agreement must be in
writing, signed by duly authorized representatives of the parties, and
stating the intent of the parties to amend this Agreement. This Agreement
shall not supersede the Indemnification Agreement dated September 12, 1997,
which shall survive this Agreement.
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13. ASSIGNMENT/SUCCESSORS. This Agreement shall be binding upon the
Company's successors. Neither party may assign his or its rights or
responsibilities under this Agreement unless such assignment has been
approved by the other party, which approval shall not unreasonably be
withheld.
14. CHOICE OF LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
15. NOT READ AGAINST DRAFTER. Because both parties have had an
opportunity to be represented by counsel and this Agreement was negotiated at
arms length, the usual presumption that an agreement be interpreted against
the drafter shall not apply.
16. NOTICES. All notices required to be given under this Agreement
shall be made by certified mail and directed to the addresses below or such
other address as specified in writing by the person to receive such notice:
If to the Company: National Telephone & Communications, Inc.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxx XxXxxxx, Esq.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
If to Employee: Xxxxxx X. Xxxxxxxxx
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
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Such notice shall be deemed received three (3) days after it is sent.
WHEREOF, the parties hereto have each executed this Agreement as of
the date first above written.
/s/ Xxxxxx X. Struefert
------------------------------------------
Xxxxxx X. Xxxxxxxxx
National Telephone & Communications, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx
Director, NTC
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GENERAL RELEASE
For a valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Xxxxxx X. Xxxxxxxxx ("Employee") (collectively the
"Parties") does hereby release and forever discharge the "Releasees" herein,
consisting of National Telephone & Communication, Inc. (the "Company") its
parents, subsidiaries, and affiliates, and each of their parents, subsidiaries,
affiliates, associates, owners, stockholders, predecessors, successors, heirs,
assigns, agents, directors, officers, partners, employees, representatives,
lawyers, and all persons acting by, through, under, or in concert with them, or
any of them, of and from any and all manner of action or actions, causes or
causes of action, in law or in equity, suits, debts, liens, contracts,
agreements, promises, liabilities, claims, demands, damages, losses, costs or
expenses, of any nature whatsoever, known or unknown, fixed or contingent
(hereinafter called "Claims"), which he now has or may hereafter have against
the Releasees by reason of any and all acts, omissions, events or facts
occurring or existing prior to the date hereof, except as expressly provided
herein. The Claims released hereunder include, without limitation, any alleged
breach of any employment agreement; any alleged breach of any covenant of good
faith and fair dealing, express or implied; any alleged torts or other alleged
legal restrictions relating to the Employee's employment and the termination
thereof; and any alleged violation of any federal, state or local statute or
ordinance including, without limitation, Title VII of the Civil Rights Act of
1964, as amended, the federal Age Discrimination in Employment Act of 1967, as
amended, and the California Fair Employment and Housing Act. This Release shall
also not apply to Employee's right to retirement and/or employee welfare
benefits that have vested and accrued prior to his separation from employment
with the Company.
IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990,
EMPLOYEE IS HEREBY ADVISED AS FOLLOWS:
Employee agrees and expressly acknowledges that this Agreement
includes a waiver and release of all claims which Employee has or may have
under the Age Discrimination in Employment Act of 1967, as amended, 29
U.S.C. Section 621, ET SEQ. ("ADEA"). The following terms and conditions
apply to and are part of the waiver and release of the ADEA claims under
this Agreement:
(a) That this paragraph and this Agreement are written in a manner
calculated to be understood by Employee.
(b) The waiver and release of claims under the ADEA contained in this
Agreement do not cover rights or claims that may arise after the date on
which Employee signs this Agreement.
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EXHIBIT "A"
(c) This Agreement provides in Section 7 for consideration in addition
to anything of value to which Employee is already entitled.
(d) Employee is advised to consult an attorney before signing this
Agreement.
(e) Employee is granted twenty-one (21) days after Employee is
presented with this Agreement to decide whether or not to sign this
Agreement. If Employee executes this Agreement prior to the expiration of
such period, Employee does so voluntarily and after having had the
opportunity to consult with an attorney.
(f) Employee will have the right to revoke the waiver and release of
claims under the ADEA within seven (7) days of signing this Agreement.
Section 7 of this Agreement provides the consideration for the waiver and
release of any claims Employee may have under the ADEA and accordingly
Section 7 shall not become effective or enforceable unless and until that
revocation period has expired without there having a revocation. ALL OTHER
PROVISIONS OF THIS AGREEMENT SHALL BECOME EFFECTIVE IMMEDIATELY UPON ITS
EXECUTION.
In order to revoke this Release, Employee shall notify the Company's
Vice President of Human Resources in writing that Employee wishes to revoke
this Release. The writing must be delivered to the offices of the Company
on or before the seventh (7) day following Employee's execution of this
Release.
EMPLOYEE ACKNOWLEDGES THAT HE IS FAMILIAR WITH THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
EMPLOYEE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS HE
MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT.
Employee represents and warrants to the Releasees that there has been
no assignment or other transfer of any interest in any Claim which he may have
against such Releasees, or any of them, and he agrees to indemnify and hold the
Releasees harmless from any liability, claims, demands, damages, costs, expenses
and attorneys' fees incurred as a result of
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EXHIBIT "A"
any person asserting any such assignment or transfer of any rights or Claims
under any such assignment or transfer.
Employee agrees that if he hereafter commences, joins in, or in any
manner seeks relief through any suit arising out of, based upon, or relating
to any of the Claims released hereunder or in any manner asserts against the
Releasees any of the Claims released hereunder, then he will pay to the
Releasees against whom such claim(s) is asserted, in addition to any other
damages caused thereby, all attorneys' fees incurred by such Releasees in
defending or otherwise responding to said suit or Claim.
Employee understands and agrees that neither the payment of money nor
the execution of this Release shall constitute or be construed as an admission
of any liability whatsoever by the Releasees.
/s/ Xxxxxx X. Xxxxxxxxx 7/8/98
---------------------------------- -----------
Xxxxxx X. Xxxxxxxxx Date
National Telephone & Communication, Inc.
/s/ Xxxxxxx X. Xxxxxx 7/12/98
---------------------------------- -----------
By: Xxxxxxx X. Xxxxxx Date
Director NTC, Inc.
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EXHIBIT "A"
GENERAL RELEASE
---------------
For a valuable consideration, the receipt and adequacy of which are
hereby acknowledged, National Telephone & Communications, Inc. (the
"Company"), does hereby release and forever discharge the "Releasees" herein,
consisting of Xxxxxx X. Xxxxxxxxx ("Employee"), his successors, heirs,
assigns, agents, partners, employees, representatives, lawyers, and all
persons acting by, through, under, or in concert with them, or any of them,
of and from any and all manner of action or actions, causes or causes of
action, in law or in equity, suits, debts, liens, contracts, agreements,
promises, liabilities, claims, demands, damages, losses, costs or expenses,
of any nature whatsoever, known or unknown, fixed or contingent (hereinafter
called "Claims"), which it now has or may hereafter have against the
Releasees by reason of any and all acts, omissions, events or facts occurring
or existing prior to the date hereof, except as expressly provided herein.
The Claims released hereunder include, without limitation, any alleged breach
of any employment agreement; any alleged breach of any covenant of good faith
and fair dealing, express or implied; any alleged torts or other alleged
legal restrictions relating to the Employee's employment and the termination
thereof; and any alleged violation of any federal, state or local statute or
ordinance.
THE COMPANY ACKNOWLEDGES THAT IT IS FAMILIAR WITH THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH, IF KNOWN BY IT MUST HAVE MATERIALLY
AFFECTED ITS SETTLEMENT WITH THE DEBTOR."
THE COMPANY BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS
IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT.
The Company represents and warrants to the Releasees that there has
been no assignment or other transfer of any interest in any Claim which it may
have against such Releasees, or any of them, and it agrees to indemnify and hold
the Releasees harmless from any liability, claims, demands, damages, costs,
expenses and attorneys' fees incurred as a result of any person asserting any
such assignment or transfer of any rights or Claims under any such assignment or
transfer.
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EXHIBIT "B"
The Company agrees that if it hereafter commences, joins in, or in any
manner seeks relief through any suit arising out of, based upon, or relating to
any of the Claims released hereunder or in any manner asserts against the
Releasees any of the Claims released hereunder, then it will pay to the
Releasees against whom such claim(s) is asserted, in addition to any other
damages caused thereby, all attorney's fees incurred by such Releasees in
defending or otherwise responding to said suit or Claim.
The Company understands and agrees that neither the payment of money nor
the execution of this Release shall constitute or be construed as an admission
of any liability whatsoever by the Releasees.
/s/ Xxxxxx X. Xxxxxxxxx 7/8/98
---------------------------------- -----------
Xxxxxx X. Xxxxxxxxx Date
National Telephone & Communication, Inc.
/s/ Xxxxxxx X. Xxxxxx 7/12/98
---------------------------------- -----------
By: Xxxxxxx X. Xxxxxx Date
Director NTC, Inc.
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EXHIBIT "B"
