EXHIBIT 10.44
SEVERANCE AND MUTUAL RELEASE AGREEMENT
THIS SEVERANCE AND MUTUAL RELEASE AGREEMENT is entered into as of the 2nd
day of August, 2002, by and between XxxxxxxXxxxxx.xxx, Inc., a Delaware
corporation (the "Company") and Xxxxxx X. Xxxxxxxx, an individual with a mailing
address at 0000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 ("Executive").
RECITALS
WHEREAS, the Company and Executive entered into that certain
Employment Agreement dated as of January 25, 1999 as amended by (i) that certain
First Amendment to Employment Agreement dated as of February 1, 2000, (ii) that
certain Second Amendment to Employment Agreement dated December 31, 2001, and
(iii) that certain Third Amendment to Employment Agreement dated June 1, 2002
(collectively, the "Employment Agreement"), pursuant to which the Company
employed Executive as its Vice President and Chief Financial Officer;
WHEREAS, the Second Amendment to the Employment Agreement provides
that Executive would agree to forego other employment and professional
opportunities and continue his employment with the Company in exchange for a
"Retention Bonus" which would be paid on the earlier of September 30, 2002 or
certain other events;
WHEREAS, the Company is entering into a Severance Agreement with its
current Chief Executive Officer and hiring a new management team and, in
connection therewith, has requested that the Executive sever his employment with
the Company effective on the "Severance Date" (as defined herein);
WHEREAS, the Executive has agreed to forgo certain severance rights
and compensation under the Employment agreement and voluntarily sever his
employment with the Company thirty (30) days from the date hereof in exchange
for certain payments to be made on the date hereof to Executive;
WHEREAS, as a condition to the Executive entering into this Agreement,
the Company has agreed to retain Executive as a consultant for the five (5)
months following the Severance Date hereof; and
WHEREAS, as a condition to this agreement, MCG Capital Corporation has
consented to the management transition and the other terms and conditions set
forth herein and simultaneously granted certain covenant waivers in connection
with its loan facility with the Company.
AGREEMENT
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Company and the Executive
hereby agree as follows:
ARTICLE I
TERMINATION OF EMPLOYMENT AND RELEASE
1.1 TERMINATION; RESIGNATION. The Executive's employment as the Vice
President and Chief Financial Officer of the Company shall terminate thirty (30)
days from the date hereof (the "Severance Date"). Effective on such date, the
Executive shall resign from all offices held at the Company and all offices held
at the Company's subsidiaries. The Company shall continue to employ Executive as
Chief Financial Officer through the Severance Date and shall pay Executive his
"Base Salary" (as defined in the Employment Agreement) during such time.
1.2 RELEASE. In consideration of the agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the parties hereto hereby releases and forever discharges
any and all claims, rights, causes of action, suits, matters and issues, known
or unknown, liquidated or unliquidated, contingent or absolute, state or
federal, in law or equity, that have been, could have been, or in the future
could be asserted, by the other and its successors, parents, subsidiaries,
shareholders, members, affiliates, assigns, heirs, executors, administrators,
agents, insurers, directors, officers, employees, representatives, associates,
attorneys, and any person acting on their behalf either directly, indirectly,
derivatively, or in any other capacity, against the other, including without
limitation the Company's severance obligations under Section 3.8 of the
Employment Agreement; provided however that the foregoing (i) shall not relieve
the Executive of any liability or responsibility to the Company as a result of
the Executive's willful misconduct, gross negligence or fraud (ii) shall not
relieve the Company from its obligations to pay any and all salary and other
benefits through the date hereof; (iii) shall not relieve either party of its
respective obligations arising under this Agreement and (iv) shall not release
the Executive from his obligations under the confidentiality (Section 6) and
non-competition provisions (Section 7) and Non-solicitation (Section 8) of the
Employment Agreement to the extent such provisions survive the termination
thereof, and in connection therewith, the parties acknowledge and agree that
such provisions shall survive for the twelve (12) month period following the
date hereof. Such provisions are set forth in the attached EXHIBIT A.
1.3 EMPLOYMENT AGREEMENT TERMINATED. This Agreement supersedes any other
agreements relating to the Executive's employment or severance, including
without limitation the Employment Agreement; provided however, the Company shall
continue to employ Executive until the Severance Date pursuant to the terms and
conditions of this Agreement.
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1.4 PRESS RELEASE. The Company and the Executive shall issue a joint press
release announcing the Executive's resignation in a form mutually agreeable to
Executive and the Company.
1.5 NON DISPARAGEMENT. Executive agrees to refrain from making any
defamatory or disparaging remarks about the Company or any of its officers,
directors, employees, lenders, preferred stockholders, products or services to
any person or persons. The Company agrees, and agrees to cause its officers,
directors, lenders and employees, to refrain from making any defamatory or
disparaging remarks about Executive to any person or persons.
ARTICLE II
SEVERANCE BENEFITS
2.1 SEVERANCE PAYMENTS. Upon the execution hereof, the Executive shall
receive an initial severance payment as follows: (i) the Company shall cause the
entire amount of the "Escrow Salary" maintained in the "Escrow Account" (as such
terms are defined under the Employment Agreement) and (ii) an amount equal to
One Hundred Fifty Thousand Dollars ($150,000.00) less the gross amount the
Company has deposited in the Escrow Account. Thereafter, the Executive shall
receive severance payments totaling an additional Seventy Five Thousand Dollars
($75,000.00) less the amount of the Base Salary received pursuant to SECTION
1.1, payable in equal installments over the five (5) months following the
Severance Date, such payments to be made monthly in advance. All severance
payments described herein (other than the release of the Escrow Salary) shall be
paid on a 1099 basis. The Executive shall be responsible to pay all taxes
required to be withheld in connection therewith, including all applicable
federal, state and local income taxes and shall indemnify the Company from any
claims in connection with any claim relating to the Executive's failure to pay
such taxes. In the event the Company fails to make any payment due hereunder to
Executive within five (5) days of its due date, the Company shall be required to
make a lump sum payment to Executive of all remaining payments due to Executive
under this Section 2.1.
2.2 HEALTH INSURANCE. The Company shall continue to provide the Executive
with family health and dental insurance coverage under the Company's existing
insurance plans for the six (6) months following the date hereof.
2.3 INSURANCE; INDEMNITY. The Company shall continue in full force and
effect Directors' and Officers' insurance for the benefit of its past and
current directors and officers, including the Executive for a period of two
years after the date hereof. The Company shall not amend its charter or bylaws
in any manner which would reduce the Company's indemnity obligations to its
directors and officers for a period of two years after the date hereof.
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ARTICLE III
CONSULTING SERVICES
CONSULTATION. Provided the Company is current in its severance and other
obligations hereunder, at the Company's reasonable request during the five (5)
months following the Severance Date, the Executive shall from time to time
provide transition financial consultation and advice, provided that (i) any such
consultation shall at no time exceed four (4) days per week and (ii) the
Executive shall provide such services from the Company's Wall, New Jersey office
(the "Wall Office") or via telephone.
ARTICLE IV
GENERAL PROVISIONS
4.1 NOTICES. Any notices provided hereunder must be in writing and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including personal delivery by telex or facsimile)
or the third day after mailing by first class mail, to the Company at its
primary office location and to the Executive at his address as listed in the
Company's payroll records with a copy in each instance to Xxxxx & Xxxxxxx, LTD,
Xxx Xxxxx Xxxx Xxxxx, Xxxxx 0000, Xxxxxxxxxx XX 00000, Attn: Xxxxxxx X. Xxxxxxx,
Esq. Any payments made by the Company to the Executive under the terms of this
Agreement shall be delivered to the Executive either in person or at his address
as listed in the Company's payroll records.
4.2 SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
4.3 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
4.4 COMPLETE AGREEMENT. This Agreement, together with all Exhibits hereto,
constitutes the entire agreement between the Executive and the Company and it is
the complete, final, and exclusive embodiment of their agreement with regard to
the Executive's termination of employment. It is entered into without reliance
on any promise or representation other than those expressly contained herein.
4.5 AMENDMENT. This Agreement may be amended only upon the mutual written
consent of the Company and the Executive.
4.6 COUNTERPARTS. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.
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4.7. HEADINGS. The headings of the Articles and Sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning thereof.
4.8. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by the Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except that
the Executive may not assign any of his duties hereunder and he may not assign
any of his rights hereunder without written consent of the Company, which
consent shall not be withheld unreasonably.
4.9 GOVERNING LAW; ARBITRATION. All questions concerning the construction,
validity, and interpretation of this Agreement shall be governed by the laws of
the State of Delaware. Any dispute regarding this Agreement shall be resolved by
binding arbitration pursuant to the rules and procedures of the American
Arbitration Association and such arbitration shall be held within a thirty (30)
mile radius of Wall, New Jersey. The arbitrator(s) shall award attorney's fees
and costs to the prevailing party in any arbitration.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year written above.
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
XxxxxxxXxxxxx.xxx, Inc.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Title: CEO
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EXHIBIT A*
*The Executive may be referred to as "Employee" in this Exhibit.
6. CONFIDENTIALITY AND NON-DISCLOSURE. Executive recognizes and
acknowledges that during the Employment Period he will have access to certain
confidential information relating to the Company and its affiliates, including,
but not limited to, operational policies, financial information, marketing
information, personnel information, trade secrets, customer information
(including customer lists), and pricing and cost policies, that are valuable,
special and unique assets of the Company (collectively, "Confidential
Information"). Executive agrees that he will not use or disclose such
Confidential Information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except as is required in the course
of performing his duties hereunder unless (i) such information becomes known to
the public generally through no breach by Executive of this covenant or (ii)
disclosure is required by law or any governmental authority or is required in
connection with the defense of a lawsuit against the disclosing party, provided,
that prior to disclosing any information pursuant to this clause (ii), Executive
shall give prior written notice thereof to the Company and provide the Company
with the opportunity to contest such disclosure. Executive agrees that, both
during the Employment Period and for a period of twelve (12) months after the
termination of this Agreement, Executive will hold in a fiduciary capacity for
the benefit of the Company, and shall not directly or indirectly use or
disclose, except as authorized by the Company in connection with the performance
of Executive's duties, any Confidential Information, that Executive may have or
may acquire (whether or not developed or compiled by Executive and whether or
not Executive has been authorized to have access to such Confidential
Information) during the term of this Agreement. The covenants contained in this
SECTION 6 shall survive for the Employment Period and for a period of twelve
(12) months thereafter; provided, however, that with respect to those items of
Confidential Information which constitute trade secrets under applicable law,
Executive's obligations of confidentiality and non-disclosure as set forth in
this SECTION 6 shall continue to survive after the applicable period above to
the greatest extent permitted by applicable law. These rights of the Company are
in addition to those rights the Company has under the common law or applicable
statutes for the protection of trade secrets.
7. NON-COMPETITION. Executive expressly covenants and agrees that for the
Employment Period and for a period of twelve (12) months thereafter, he shall
not, directly or indirectly, seek, obtain or accept a "Competitive Position" in
the "Restricted Territory" with a "Competitor" of the Company (as such terms are
hereafter defined). For purposes of this Agreement, a "Competitor" of the
Company means any business, individual, partnership, joint venture, association,
firm, corporation or other entity engaged, wholly or partly, in the business of
selling internet access service or in any related business which the Company
and/or its affiliates may engage in from time to time during the term of this
covenant; the "Restricted Territory" means each state of the United States of
America in which the Company and/or its affiliates transacts business during the
term of this covenant; a "Competitive Position" means any employment with any
Competitor of the Company whereby Executive will use or is likely to use any
Confidential Information, or whereby
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Executive has duties for such Competitor that are the same or substantially
similar to those actually performed by Executive pursuant to the terms hereof.
Nothing contained in this SECTION 7 is intended to prevent Executive from
investing in stock or other securities listed on a national securities exchange
or actively traded on the over the counter market or any corporation engaged,
wholly or partly, in the sale of telecommunications products or services;
provided, however, that Executive and members of his immediate family shall not,
directly or indirectly, hold more than a total of five percent (5%) of all
issued and outstanding stock or other securities of any such corporation.
8. NON-SOLICITATION.
8.1 NON-SOLICITATION OF CUSTOMERS AND VENDORS. Executive agrees that
he will not take any customer lists of the Company after leaving his employ and
that he will, for the Employment Period and for a period of twelve (12) months
thereafter, (i) refrain from soliciting or attempting to solicit directly or by
assisting others, any business from any of the Company's customers, including
actively sought prospective customers, with whom Executive had "material
contact" during the employment for purposes of providing products or services or
(ii) refrain from interfering with any of the Company's agency, supplier or
vendor relationships.
8.2 NON-SOLICITATION OF EMPLOYEES. Executive agrees that he will, for
the Employment Period and for a period of twelve (12) months thereafter, refrain
from recruiting or hiring, or attempting to recruit or hire, directly or by
assisting others, any other employee of the Company who is employed by the
Company or any successor or affiliate of the Company as of the date of this
Agreement.
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