Exhibit 10.71
SEPARATION AGREEMENT
AGREEMENT, made as of December 11, 2001, by and among STONEPATH GROUP,
INC. (the "Company"), a corporation organized and existing under the laws of the
State of Delaware and XXXXXX X. XXXXX, ("Xxxxx"), an individual presently
residing within the Commonwealth of Pennsylvania.
W I T N E S S E T H
WHEREAS, the Company and Panzo are parties to an employment agreement
dated April 19, 2001 (the "Employment Agreement") pursuant to which Panzo served
as an executive officer of the Company; and
WHEREAS, the Company and Panzo desire to terminate the Employment
Agreement, together with any and all other arrangements, agreements or
understandings between them, and except as otherwise set forth herein, to
terminate any and all claims that relate in any manner to any matter arising out
of or relating in any way to Panzo's employment with or separation from the
service of the Company, or that otherwise relate to Panzo's relationship with
the Company, and to take the other actions as provided below.
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, the parties hereto, intending to be legally bound hereunder,
agree as follows:
1. Termination of Employment Agreement; Resignation from Office.
1.1 Under and subject to the agreements and covenants in this
Agreement, the parties hereto agree that the Employment Agreement is hereby
terminated, effective as of December 14, 2001 (the "Effective Date"), except to
the extent hereafter provided. Panzo and the Company also agree that any other
arrangements, agreements and understandings between them relating in any way to
Panzo's employment by the Company or services on behalf of the Company, are also
terminated and no longer of any force and effect, except to the extent hereafter
provided. Panzo acknowledges that he shall be entitled to no further
compensation or benefits under the Employment Agreement or any other
arrangements, agreements or understandings with the Company after the Effective
Date, except for the severance and other amounts described in this Agreement.
1.2 In conjunction with the termination of the Employment Agreement,
Panzo hereby resigns in all capacities as an officer and employee of the Company
as of the Effective Date, and does thereby relinquish any of the powers, duties
or authorities otherwise bestowed upon an officer or employee under either the
Employment Agreement or under applicable federal law or the laws of the State of
Delaware.
1.3 The parties agree that such resignation and termination of the
Employment Agreement are not related to or as a result of, a disagreement
relating to the Company's operations, policies or practices. The Company agrees
that in any publicly released materials it will attribute the resignation to
such causes as Panzo and the Company shall mutually agree upon. Panzo and the
Company shall cooperate with each other in the development and distribution of
all news releases and other public disclosures concerning the termination of the
Employment Agreement and this Agreement. Neither Panzo nor the Company shall
issue any news releases or make any other public disclosure without the prior
consent of the other party, unless such is required by law upon the written
advice of counsel or is in response to published newspaper or other mass media
reports, in which such latter event any statements made shall be consistent with
prior statements agreed to by the other party.
1.4 Panzo shall remain on the Company's Board of Directors from the
Effective Date until the date of the Company's next Annual Meeting of its
Stockholders called for the purpose of electing directors; however, he shall
upon the Effective Date relinquish the title of "Vice-Chairman." Panzo agrees
not to stand for re-election as a member of the Company's Board of Directors at
the next Annual Meeting of the Company's Stockholders called for the purpose of
electing directors for a period of three (3) years from the Effective Date.
2. Release of Obligations.
2.1 In consideration of the agreements of Panzo set forth in this
Agreement, the Company, intending to be legally bound hereby releases and
forever discharges Panzo, his heirs, executors, administrators, successors and
assigns (collectively "Panzo Releasees"), from all claims, charges, complaints,
contracts (including the Employment Agreement) or causes of action including
attorneys fees and costs (collectively, "Claims") except with respect to Panzo's
obligations under this Agreement, and which the Company now has or may or can
hereafter have, known or unknown, by reason of any cause whatsoever, on account
of, or in anyway arising out of any transactions or events which have occurred
prior to the signing of this Agreement, and specifically with regard to or
relating to Panzo's employment with the Company or the termination thereof or
the Employment Agreement; but only with respect to Claims to the extent that the
underlying action or inaction of Panzo was taken by Panzo in good faith and in a
manner that he reasonably believed was in or not opposed to the best interests
of the Company.
2.2 In consideration of the benefits provided to Panzo by the
Company under this Agreement, Panzo, intending to be legally bound hereby
releases and forever discharges the Company, its shareholders, officers,
directors, employees, agents, subsidiaries, successors, assigns and affiliates,
and all its and their employees, agents and directors and their respective
heirs, executors, administrators, successors and assigns (collectively "Company
Releasees"), from all claims, charges, complaints, contracts (including the
Employment Agreement) or causes of action including attorneys fees and costs
except with respect to the Company's obligations under this Agreement, and which
Panzo now has or may or can hereafter have, known or unknown, by reason of any
cause whatsoever, on account of, or in anyway arising out of any transactions or
events which have occurred prior to the signing of this Agreement, and
specifically with regard to or relating to the Panzo's employment with the
Company or the termination thereof, under Title VII of the Civil Rights Act of
1964, as amended, the Pennsylvania Human Relations Act, as amended, the Equal
Pay Act, as amended, The Americans With Disabilities Act, The Employee
Retirement Income Security Act of 1974, Pennsylvania Wage Payment and Collection
Law, excluding claims for accrued or vested benefits under any Company sponsored
welfare, benefit or pension plan, or any similar federal, state or local
statutes, ordinances or regulations. Panzo acknowledges that he has not
heretofore filed any claims against Releasees in a court of law or with any
governmental agency.
3. Certain Obligations of Employment Agreement to Survive.
3.1 Notwithstanding the above, the Company and Panzo agree that
Sections 8 through 10 of the Employment Agreement shall survive the termination
thereof and shall continue in effect through April 19, 2004. The terms of this
paragraph shall survive this Agreement. Panzo reaffirms that his continuing
obligations of non-disclosure and non-competition are in exchange for valuable
consideration received by him in this Agreement.
3.2 The Company agrees that for and in consideration of compliance
by Panzo with the covenants and agreements contained herein, it shall continue
to indemnify and hold Panzo harmless in the manner and to the extent provided
for in the Company's Bylaws and Certificate of Incorporation, as in effect on
the date hereof, the terms of which shall survive this Agreement. The Company
shall maintain Directors' and Officers' insurance coverage in at least the
amounts and with at least the coverage maintained as of the date of this
Agreement for a period of not less than three (3) years following the Effective
Date.
4. Consideration.
4.1 Severance Payments.
In consideration of the covenants and agreements contained herein,
Panzo shall receive as sole, total and exclusive cash consideration hereunder,
the sum of $575,000 as severance, less any amounts required to be withheld under
applicable tax laws, payable in the following manner:
(a) $275,000 on or before January 2, 2002 (the "First Payment"); and
(b) $300,000 on or before January 2, 2003 (the "Second Payment").
If the Company fails to make either the First Payment or the Second
Payment in full within ten (10) days of receipt of a written notice from Panzo
to the effect that the Company is otherwise in default with respect to the First
Payment or the Second Payment (the "Default Notice"), then, in lieu of the First
Payment or the Second Payment, as the case may be, Panzo will be entitled to
receive, and the Company shall pay to Panzo within five (5) days of the date of
such Default Notice, a lump sum equal to the balance of the entire cash amount
(after crediting the First Payment, if the failure is with respect to the Second
Payment) Panzo would have been entitled to receive from the Company under
Section 6.2(d) of the Employment Agreement as a result of the Company's
termination of the Employment Agreement other than For Cause, without discount.
4.2 Treatment of Options.
In further consideration of the covenants and agreements contained
herein as of the Effective Date, the Company agrees that Panzo's right to
exercise all options to purchase shares of the Company's common stock of which
Panzo is the beneficial owner is fully vested as of the Effective Date. This
includes options to purchase 1,020,000 shares of the Company's common stock,
issued subject to the terms of Non-Plan Option No. 2001-1, options to purchase
250,000 shares of the Company's common stock, issued subject to the terms of
Plan Option No. 2001-6 and options to purchase 24,000 shares of the Company's
common stock (assumed from Net Value, Inc.), issued subject to the terms of a
Non-Qualified Stock Option Agreement of Net Value, Inc. dated December 4, 1999
(collectively, the "Options"). The Options shall continue to remain in full
force and effect for the specified term thereof, subject to the respective terms
of each applicable option instrument, as if the Employment Agreement had been
terminated by the Company other than For Cause. Furthermore, as soon as
practicable after the Effective Date of this Agreement the Company shall file
and cause to become effective a registration statement on Form S-8 with the
Securities and Exchange Commission covering resale of the shares of the
Company's common stock issuable by the Company upon exercise of the Options (the
"Registration Statement"). The Company agrees to maintain the Registration
Statement in effect at all times during which the Options remain outstanding.
Furthermore, if Panzo seeks to exercise one or more Options and at that time the
Registration Statement is not effective such that the shares of common stock
issued upon such exercise are not immediately freely tradable, (i) Panzo shall
be permitted to exercise such Options or Options via a cashless exercise method,
and any provision in the Option which otherwise provided only the "Option
Administrator" the discretion to permit cashless exercise, shall be modified so
as to permit Panzo the discretion to elect a cashless method of exercise, and
(ii) all restrictions on resale under Section 6.1 below shall be suspended until
such time as the Registration Statement is effective again.
4.3 Benefits.
(a) In addition to the consideration set forth above, the Company
shall at its own expense, for a period of one (1) year from the Effective Date,
maintain Panzo and his family as participants in the major medical or group
health plan available to its most senior executive employees during such one (1)
year period. In the event that it is determined that the Company may not include
Panzo and his family on such plan, it shall reimburse Panzo for all premiums and
other costs incurred by Panzo in obtaining equivalent coverage.
(b) In addition, the Company agrees to maintain Panzo's membership
or guest attendance rights to Doral Country Club through June 30, 2002, however,
costs incurred there (such as meals, green fees, hotel accommodations, etc.)
shall remain the responsibility of Panzo.
(c) The Company agrees to pay the reasonable attorney fees of Klehr,
Harrison, Xxxxxx, Xxxxxxxxx and Xxxxxx, as counsel to Panzo in connection with
the negotiation and review of this Agreement.
5. Affirmative Covenants.
5.1 Advisory Services.
(a) Scope of Services. From the Effective Date until the date of the
Company's next Annual Meeting of its Stockholders, Panzo agrees that upon the
specific request of the Company and at Panzo's sole discretion, he shall provide
advisory services and general assistance on a limited basis to, or on behalf of,
the Company in connection with confirming matters or providing information
relative to matters as to which he had principal responsibility while in the
employ of the Company. This includes: (i) general matters of corporate finance
as it relates to the Company's capitalization structure and securities issues;
(ii) the analysis and negotiation of debt facilities intended to secure
acquisition and working capital for the Company; and (iii) investor relations
matters, such as responding to investor inquiries and meeting with the members
of the investment and brokerage communities. Any disclosures of Company
information made by Panzo in good faith in the course of such activities shall
not constitute a breach of his nondisclosure obligations under the Employment
Agreement. The Company agrees to reimburse Panzo for reasonable expenses
incurred by him in the performance of advisory services to the Company.
(b) Limited use of Office Facilities. Primarily so as to facilitate
the limited advisory services described at subparagraph 5.1(a) above, from the
Effective Date until the date of the Company's next Annual Meeting of its
Stockholders, or such earlier time as the Company otherwise elects (provided
that thereafter the Company shall make no further requests for services under
subparagraph 5.1(a) above), Panzo shall be permitted to occupy an office and use
the general facilities of the Company's Philadelphia offices located at Xxx Xxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx, to pursue business matters on
behalf of the Company.
5.2 Return of Company Materials.
On or before the date of the Company's next Annual Meeting of
its Stockholders, Panzo will deliver to the Company any and all Company property
in his possession or under his control if requested to do so by the Company. For
the purpose of this paragraph, the term "property" means all files, memoranda,
minutes of Board meetings, employee files, documents, papers, agreements, keys,
credit cards, records, computer hardware, computer software, computer apparatus,
items of personal property, machinery and equipment or other materials, that
belong to the Company or were purchased with funds or in the name of the
Company. The Company acknowledges that certain items of equipment and personal
property located in the Company's Philadelphia, Pennsylvania offices were
purchased by Panzo using personal funds and shall remain his property
notwithstanding their use on behalf of the Company.
5.3 Non-Disparagement.
(a) Panzo agrees that he shall not make or publish any negative,
critical, disparaging, slanderous, or libelous statements about the Company or
any of its officers, directors, agents, employees, or representatives, and
unless (and then only to the extent required by law), shall not disclose the
terms and provisions of this Agreement to any third party, except to the extent
previously publicly disclosed by the Company.
(b) The Company agrees that neither it nor its officers, directors,
agents, employees, or representatives shall make or publish negative, critical,
disparaging, slanderous, or libelous statements about Panzo, and shall not
disclose the terms and provisions of this Agreement to any third party, except
to the extent the Company believes in good faith that such disclosure is
necessary to comply with applicable securities or other laws.
6. Stockholder matters.
6.1 Limitations on Public Resale.
From and after the Effective Date, Panzo agrees to limit the sale of
any Shares of the Company's common stock to those amounts that would be
permissible to be sold under Rule 144(e) of the Securities Act of 1933, as
amended, as if Panzo remained an "affiliate" of the Company at all times of such
sales. Sales of securities by Panzo not affected through the American Stock
Exchange (or any other securities exchange on which the Company's common stock
is listed) shall not be included within this limitation if such sales are
completed at less than a ten (10%) percent discount to the market price for the
Company's common stock at the time of the transaction.
6.2 Limitation upon a Follow-on Offering.
In the event the Company completes a public offering of at least $75
million of its common stock or securities convertible into common stock and the
managing underwriter of such offering requests a lock-up on sales of common
stock by senior Company executives, if requested by the Company, Panzo shall
agree to the same lock-up as applicable to senior Company executives for a
period not to exceed 90 days from the closing date of the offering. In that
event, upon expiration of such lock-up period, the limitations upon resale in
Section 6.1 above shall terminate.
6.3 Standstill Provision.
For and in consideration of the mutual covenants and premises
contained herein, for a period of three (3) years from the Effective Date,
neither Panzo nor any family member (defined for this purpose to include his
spouse and children) or company, partnership or trust controlled by Panzo (or
such family member) will: (i) acquire, offer to acquire, or agree to acquire,
directly or indirectly, by purchase or otherwise, any voting securities or
direct or indirect rights or options to acquire any voting securities of the
Company (other than upon the exercise of Options); (ii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" to vote
(as such terms are interpreted in the proxy rules of the Securities and Exchange
Commission), or seek to advise or influence any person or entity with respect to
the voting of any voting securities of the Company, or (iii) form, join or in
any way participate in a "group" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934 with respect to any voting securities of the
Company for the purpose of seeking to control the management, Board of Directors
or policies of the Company. Further, the parties acknowledge the Company would
not have an adequate remedy at law for money damages in the event that this
covenant were not performed in accordance with its terms and therefore Panzo
agrees that the Company shall be entitled to specific enforcement of the terms
hereof in additional to any other remedy to which it may be entitled, at law or
in equity.
7. Miscellaneous
7.1 Notices.
All notices which are required or permitted to be given pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered personally or by telegraph or by
registered certified mail, postage prepaid, as follows:
If to the Company:
Stonepath Group, Inc.
Xxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
If to Panzo:
Xxxxxx X. Xxxxx
0 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Notice shall be deemed to have been given upon receipt thereof as to
communications that are personally delivered or telegraphed and five (5) days
after deposit of the same in any United States mail post office box in the state
to which the notice is addressed, or seven (7) days after deposit of same in any
such post office box other than in the state to which the notice is addressed,
postage prepaid, addressed as set forth above. Notice shall not be deemed given
under the preceding sentence unless and until notice shall be given to all
addressees above other than the sender. The addressees and addresses for the
purpose of this Section may be changed by giving written notice of such change
in the manner provided herein for giving notice. Unless and until such written
notice is given, the addressees and addresses as stated, or as provided herein
if no written notice of change has been given, shall be deemed to continue in
effect for all purposes hereunder.
7.2 Applicable Law.
This agreement and all documents executed and delivered in
connection herewith and the rights and obligations of the parties hereto and
thereto shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania other than and without giving effect to the laws of
the Commonwealth of Pennsylvania relating to choice of law.
7.3 Applicable Jurisdiction.
The parties hereby agree that any action, at law or in equity,
arising under this Agreement or any of the other documents executed and
delivered in connection herewith, shall be filed in and only in the state courts
of the Commonwealth of Pennsylvania for the County of Philadelphia or the United
States District Court for the Eastern District. The parties hereby consent and
submit to the in personam jurisdiction of such courts for the purposes of
litigating any such action.
7.4 Assignments.
This Agreement and the other documents executed and delivered in
connection herewith shall be binding upon and inure to the benefit of the
parties hereto and their respective personal and legal representatives, heirs,
successors, and assigns; provided, however, that Panzo may not assign or
transfer his rights in and to this Agreement or any other document executed and
delivered in connection herewith, without the prior written consent of the
Company.
7.5 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 prohibited by or invalid
under applicable law, such provisions will be ineffective only to the extent of
such prohibition or invalidity, without invaliding the remainder of this
Agreement.
7.6 Further Cooperation.
Each Party covenants and agrees to prepare, execute, acknowledge,
file, record, publish, and deliver to the other Party such other instruments,
documents, and statements including, without limitation, instruments and
documents of assignment, transfer, and conveyance, and take such other action as
may be reasonably necessary or convenient in the discretion of the requesting
Party to carry out more effectively the purposes of this Agreement.
7.7 Entire Agreement.
This instrument contains the entire agreement of the parties. It may
not be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
7.8 Signatures of Counterpart.
This Agreement may be executed in multiple counterparts, each of
which shall constitute an original, but all of which taken together shall
constitute one and the same instrument.
7.9 Counsel Review.
Panzo acknowledges that he has read and understands the contents of
this Agreement. Panzo acknowledges that he has been specifically advised by
Company to consult with an attorney before signing it and Panzo further
acknowledges that this Agreement was reached after extensive negotiation in
which Panzo was represented by counsel. Panzo acknowledges that he has executed
this Agreement voluntarily and of his own free will, without coercion and with
full knowledge of what it means to do so.
7.10 Cooperation of Panzo.
(a) Litigation Matters. Panzo agrees that without additional cost to
the Company (except for reimbursement of direct expenses) he will cooperate with
Company and Company's counsel in providing cooperation and assistance with
respect to matters of ongoing litigation and disputes and in matters of future
disputes or litigation to the extent they arise with respect to matters of which
Panzo had knowledge during his tenure as an executive officer of the Company.
Panzo warrants that, upon reasonable notice, he will make himself available to
the Company and its counsel upon request by telephone and/or will appear at
depositions and/or trials without subpoena or other process. Panzo agrees that
counsel for the Company may contact him directly, rather than through his
counsel. Panzo warrants that, upon reasonable notice, he will make all documents
requested by the Company and/or its counsel available to the Company and its
counsel without subpoena or other process. The Company will bear any expenses
for copying documents it requests from Panzo. The Company will reimburse Panzo
for reasonable and necessary direct expenses incurred by him in connection with
Company's request to Panzo to appear for deposition or trial, or if Panzo is
requested or required to appear for deposition or trial by someone other than
Company.
(b) General Corporate Matters. Through the end of the originally
scheduled term of his Employment Agreement, Panzo agrees that, without
additional cost to the Company (except for reimbursement of direct expenses) he
will cooperate with the Company and Company's counsel in providing cooperation
and assistance with respect to matters involving the Company to the extent they
involve matters for which Panzo as a former executive officer had knowledge and
involvement. Panzo warrants that, upon reasonable notice and at mutually
agreeable times and places, he will make himself available to the Company by
telephone or in person. The Company will reimburse Panzo for reasonable and
necessary direct expenses incurred by him in connection with any requests to
provide assistance.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
ATTEST: STONEPATH GROUP, INC.
By:
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WITNESS:
/s/ XXXXXX X. XXXXX
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XXXXXX X. XXXXX
