TRANSITION AGREEMENT
Exhibit 10.20
This TRANSITION AGREEMENT is entered into as of February 15, 2006 by and between
NitroSecurity, Inc., a Delaware corporation (the “Company”), and Xxxxx X. Xxxxxxxxxxx (“Xx.
Xxxxxxxxxxx”).
WHEREAS, Xx. Xxxxxxxxxxx is currently serving as the Company’s President and Chief Executive
Officer pursuant to an Employment Agreement, dated as of July 1, 2005 (the “Employment Agreement”);
and
WHEREAS, the parties desire to terminate the Employment Agreement as of the date hereof and to
secure Xx. Xxxxxxxxxxx’x continued service as interim President and Chief Executive Officer until
an appropriate transition of duties to a new President and Chief Executive Officer is completed.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein,
the parties agree as follows.
1. Agreement.
(a) Employment Agreement. The Company and Xx. Xxxxxxxxxxx hereby terminate the
Employment Agreement as of the date hereof (the “Termination Date”); provided, however, Sections 9
and 12 of the Employment Agreement shall survive such termination. In consideration of the
termination of the Employment Agreement, the Company shall make the following payments to Xx.
Xxxxxxxxxxx, in each case less any amounts that the Company is required by law to withhold:
(i) within two business days after the expiration of the revocation period referred to in
Section 7 of this Transition Agreement, an amount equal to 50% of Xx. Xxxxxxxxxxx’x annual base
salary currently in effect (such 50% equal to $105,000), plus any accrued, but unpaid base salary
and any accrued vacation time;
(ii) within ninety days after the Termination Date, an amount equal to 25% of Xx.
Xxxxxxxxxxx’x annual base salary currently in effect (such 25% equal to $52,500); and
(iii) within one hundred eighty days after the Termination Date, an amount equal to 25% of Xx.
Xxxxxxxxxxx’x annual base salary currently in effect (such 25% equal to $52,500).
(b) At-Will Employment. As of the Termination Date, Xx. Xxxxxxxxxxx’x employment will
convert to full time “at will” employment (the “At-Will Period”). During the At-Will Period, Xx.
Xxxxxxxxxxx shall continue to serve as the Company’s President and Chief Executive Officer and be a
member of the Company’s Board of Directors (the “Board”) until such time as the Company is able to
hire and transition Xx. Xxxxxxxxxxx’x duties to a new President and Chief Executive Officer. At
any time during the At-Will Period, either party may terminate Xx. Xxxxxxxxxxx’x employment with or
without cause upon two weeks prior notice, at which time the At-Will Period shall end. The date
upon which the At-Will Period, and Xx. Xxxxxxxxxxx’x employment, terminates in accordance with this
paragraph shall be referred to
herein as the “Separation Date.” On the Separation Date, Xx. Xxxxxxxxxxx further agrees to
resign from the Board.
(c) Compensation During At-Will Period. During the At-Will Period, the Company shall
pay Xx. Xxxxxxxxxxx an annual base salary of $210,000, less applicable taxes and withholdings. Xx.
Xxxxxxxxxxx shall be eligible to participate in all of NitroSecurity’s health and benefits programs
during the At-Will Period. On each one month anniversary of the Termination Date during the
At-Will Period, the Company shall issue Xx. Xxxxxxxxxxx a stock option to purchase 150,000 shares
of the Company’s common stock, $0.01 par value per share, which shares shall be fully vested and
shall be upon such other terms as may be determined by the Board; provided, however, that a maximum
of six such monthly stock option grants may be made.
(d) Benefits Following Separation Date. Following the Separation Date, Xx.
Xxxxxxxxxxx, at his own expense, may elect to continue receiving group medical and dental insurance
pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et seq. All other benefits,
including life insurance and long term disability insurance, will cease on the Separation Date.
(e) Treatment of Stock Options. On the Separation Date, each stock option held by Xx.
Xxxxxxxxxxx, to the extent unvested, shall become exercisable in full. The parties acknowledge
that, pursuant to the Internal Revenue Code, each such stock option, if unexercised by Xx.
Xxxxxxxxxxx during the three-month period following the Separation Date, will automatically convert
into a nonstatutory stock option. Following such conversion, all such stock options held by Xx.
Xxxxxxxxxxx shall remain exercisable until the four year anniversary of the Separation Date. In
addition, Xx. Xxxxxxxxxxx shall be entitled to participate in any repricing of stock options
undertaken by the Company on the same terms and conditions generally offered to other holders of
the Company’s stock options. To the extent necessary, the terms of this paragraph shall supercede
any conflicting terms contained in any stock option agreement between the Company and Xx.
Xxxxxxxxxxx.
2. Non-Disclosure and Non-Solicitation Obligations. Xx. Xxxxxxxxxxx acknowledges and
reaffirms his obligation, consistent with applicable law, to keep confidential and not to disclose
any and all non-public information concerning the Company that he acquired during the course of his
employment with the Company, including, but not limited to, any non-public information concerning
the Company’s business affairs, business prospects and financial condition, as is stated more fully
in the Confidential Information and Invention Assignment Agreement he executed, which remains in
full force and effect. Xx. Xxxxxxxxxxx further acknowledges and reaffirms his obligations under
Section 9 of the Employment Agreement, which also remains in full force and effect.
3. Return of Company Property. Xx. Xxxxxxxxxxx agrees that, as of the Separation
Date, he will return to the Company all keys, files, records (and copies thereof), equipment
(including, but not limited to, computer hardware, software and printers, wireless handheld
devices, cellular phones, pagers, etc.), Company identification and any other Company-owned
property in his possession or control, and that he will leave intact all electronic Company
documents, including, but not limited to, those which he developed or helped develop during his
employment. Xx. Xxxxxxxxxxx further confirms that he will have cancelled all accounts for his
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benefit, if any, in the Company’s name, including, but not
limited to, credit cards, telephone charge cards, cellular phone and/or pager accounts and computer
accounts, provided that Xx. Xxxxxxxxxxx, at his expense, shall be entitled to retain the phone
number associated with his cellular phone and transfer it to a new cellular phone service paid for
by Xx. Xxxxxxxxxxx.
4. Business Expenses and Compensation. On the Separation Date, Xx. Xxxxxxxxxxx shall
present the Company with a statement of all business expenses incurred in conjunction with the
performance of his employment with the Company. The Company shall reimburse Xx. Xxxxxxxxxxx for
such business expenses promptly after the Separation Date pursuant to the Company’s standard
reimbursement policies and practices. Except as provided in this Transition Agreement, Xx.
Xxxxxxxxxxx acknowledges that, as of the Termination Date, he has received payment in full for all
services rendered in conjunction with his employment by the Company and that no other compensation
is owed to him.
5. Release of Claims by Xx. Xxxxxxxxxxx. In consideration of the benefits provided
for in this Transition Agreement, which Xx. Xxxxxxxxxxx acknowledges he would not otherwise be
entitled to receive, Xx. Xxxxxxxxxxx hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Company, its officers, directors, stockholders, corporate
affiliates, subsidiaries, parent companies, agents and employees (each in their individual and
corporate capacities) (hereinafter, the “Released Parties”) from any and all claims, charges,
complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs,
accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages,
executions, obligations, liabilities and expenses (including attorneys’ fees and costs), of every
kind and nature which he ever had or now has against the Released Parties, including, but not
limited to, any claims arising out of his employment with and/or separation from the Company,
including, but not limited to, all employment discrimination claims under Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C.
§ 621 et seq., the Americans With Disabilities Act of 1990, 00 X.X.X. §00000 et seq., the Family
and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification
Act (“WARN”), 29 U.S.C. § 2101 et seq., and the Rehabilitation Act of 1973, 29 U.S.C. § 701 et
seq., all as amended; all claims arising out of the Fair Credit
Reporting Act, 15 U.S.C. §1681 et seq., the Employee Retirement Income Security Act of 0000 (“XXXXX”), 00 X.X.X. §0000 et seq., the
Massachusetts Fair Employment Practices Act., M.G.L. c. 151B, §
1 et seq., the Massachusetts Civil
Rights Act, M.G.L. c. 12, §§ 11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c. 93, § 102
and M.G.L. c. 214, § 1C, the Massachusetts Labor and Industries
Act, M.G.L. c. 149, § 1 et seq.,
the Massachusetts Privacy Act, M.G.L. c. 214, § 1B, the Massachusetts Maternity Leave Act , M.G.L.
c. 149, § 105(d), the New Hampshire Law Against Discrimination, N.H. Rev. Stat. Xxx. § 354-A:1
et seq., N.H. Rev. Stat. Xxx. § 275:36 et seq. (New Hampshire equal
pay law), and the New Hampshire Whistleblowers’ Protection Act, N.H. Rev. Stat. Xxx. § 275-E:1
et seq., all as amended; all common law claims including, but not limited to,
actions in tort, defamation and breach of contract; all claims to any non-vested ownership interest
in the Company, contractual or otherwise, including, but not limited to, claims to stock or stock
options (except for those share/stock option rights and interests set forth in the Transition
Agreement); and any claims or damages arising out of his employment with or separation from the
Company (including a claim for retaliation) under any common
law theory or any federal, state or local statute or ordinance not expressly referenced above;
provided, however, that nothing in this Agreement prevents Mr.
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Xxxxxxxxxxx from filing, cooperating
with or participating in any proceeding before the EEOC or a state Fair Employment Practices Agency
(except that Xx. Xxxxxxxxxxx acknowledges that he may not be able to recover any monetary benefits
in connection with any such claim, charge or proceeding). Notwithstanding the foregoing, nothing
herein shall impair Xx. Xxxxxxxxxxx’x rights to indemnification pursuant to the Company’s Amended
and Restated Certificate of Incorporation and that certain Director Indemnification Agreement,
dated as of January 11, 2006, between the Company and Xx. Xxxxxxxxxxx.
6. Company Release of Claims. The Company, on behalf of itself and all of the
Released Parties, hereby fully, forever, irrevocably and unconditionally releases, remises and
discharges Xx. Xxxxxxxxxxx from any and all claims, charges, complaints, demands, actions, causes
of action, suits, rights, debts, contracts, agreements, promises, damages, liabilities and expenses
of any kind or nature, known or unknown, which the Company or any of the Released Parties ever had
or have against him arising out of his employment with or separation from the Company. Nothing
herein shall be deemed to waive or release claims by the Company or any of the Released Parties for
any acts of dishonesty, disloyalty, bad faith, moral turpitude, fraud, misappropriation,
embezzlement or any knowing or willful violation of any applicable law, rule or regulation.
7. Acknowledgments. Xx. Xxxxxxxxxxx is advised that he has at least twenty-one (21) days to
consider this Transition Agreement and that the Company advises him to consult with an attorney of
his own choosing prior to signing this Transition Agreement. Xx. Xxxxxxxxxxx is advised that he
may revoke this agreement for a period of seven (7) days after he signs it, and the agreement shall
not be effective or enforceable until the expiration of each seven (7) day revocation period. Xx.
Xxxxxxxxxxx understands and agrees that by entering into this agreement and signing it he is
waiving any and all rights or claims he might have under The Age Discrimination in Employment Act,
as amended by The Older Workers Benefit Protection Act, and that he has received consideration
beyond that to which he was previously entitled.
8. Non-Disparagement. Xx. Xxxxxxxxxxx understands and agrees that as a condition for payment
of the consideration herein described, he shall not make any false, disparaging or derogatory
statements to any media outlet, industry group, financial institution or current or former
employee, consultant, client or customer of the Company regarding the Company or any of its
directors, officers, employees, agents or representatives or about the Company’s business affairs
and financial condition. The Company shall instruct its directors and executive officers not to
make any false, disparaging or derogatory statements to any media outlet, industry group, financial
institution or future employer regarding Xx. Xxxxxxxxxxx.
9. Confidentiality. The terms and contents of this Transition Agreement, and the contents of
the negotiations and discussions resulting in this Transition Agreement, shall be maintained as
confidential by the Company and Xx. Xxxxxxxxxxx, and their respective agents and representatives
and shall not be disclosed except to the extent required by federal or state law or as otherwise
agreed to in writing by the Company and Xx. Xxxxxxxxxxx.
10. Amendment. This Transition Agreement shall be binding upon the parties and may
not be modified in any manner, except by an instrument in writing of concurrent or
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subsequent date
signed by duly authorized representatives of the parties hereto. This Transition Agreement is
binding upon and shall inure to the benefit of the parties and their respective agents, assigns,
heirs, executors, successors and administrators.
11. No Waiver. No delay or omission by either party in exercising any right under
this Transition Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by a party on any one occasion shall be effective only in that instance and shall not
be construed as a bar or waiver of any right on any other occasion.
12. Validity. Should any provision of this Transition Agreement be declared or be
determined by any court of competent jurisdiction to be illegal or invalid, the validity of the
remaining parts, terms or provisions shall not be affected thereby and said illegal and/or invalid
part, term or provision shall be deemed not to be a part of this Transition Agreement.
13. Voluntary Assent. Xx. Xxxxxxxxxxx affirms that no other promises or agreements of
any kind have been made to or with him by any person or entity whatsoever to cause him to sign this
Transition Agreement, and that he fully understands the meaning and intent of this agreement. Xx.
Xxxxxxxxxxx states and represents that he has had an opportunity to fully discuss and review the
terms of this Transition Agreement with an attorney. Xx. Xxxxxxxxxxx further states and represents
that he has carefully read this Transition Agreement, understands the contents therein, freely and
voluntarily assents to all of the terms and conditions hereof, and signs his name of his own free
act.
14. Applicable Law. This Transition Agreement shall be interpreted and construed by
the laws of the State of New Hampshire, without regard to conflict of laws provisions. The Company
and Xx. Xxxxxxxxxxx each agrees that any dispute or controversy arising out of or relating to any
interpretation, construction, performance or breach of this Transition Agreement shall be settled
by arbitration to be held in Boston, Massachusetts, in accordance with the Employment Dispute
Arbitration Rules of the American Arbitration Association before a single arbitrator who shall have
experience in the area of the matter in dispute. The arbitrator may grant relief in the nature of
injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall
be final, conclusive and binding on the parties. Judgment may be entered on the arbitrator’s
decision in any court having jurisdiction. The Company and Xx. Xxxxxxxxxxx shall each pay one-half
of the costs and expenses of such arbitration, and each of them shall separately pay their own
counsel fees and expenses and other costs of the arbitration.
15. Entire Agreement. This Transition Agreement contains and constitutes the entire
understanding and agreement between the parties hereto and cancels all previous oral and written
negotiations, agreements, commitments and writings in connection therewith. Nothing in this
Section, however, shall modify, cancel or supersede Xx. Xxxxxxxxxxx’x obligations set forth in
Section 2 herein.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Transition Agreement as of the
date first set forth above.
| NITROSECURITY, INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxx
|
|||||
| Title: Chairman | ||||||
| /s/ Xxxxx X. Xxxxxxxxxxx | ||||
| Xxxxx X. Xxxxxxxxxxx | ||||
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