SEPARATION AGREEMENT
Exhibit 99.1
This Separation Agreement (this “Agreement”) is entered into as of December 5, 2005 between
Technology Solutions Company, a Delaware corporation (the “Company”), and Xxxxxxx X. Xxxxxxx (the
“Executive”).
WHEREAS, the Executive currently serves as the President and Chief Executive Officer and as a
director of the Company and as a director and officer of subsidiaries of the Company; and
WHEREAS, the Company and the Executive desire to set forth herein their mutual agreement with
respect to all matters relating to (i) the Executive’s resignation as a director and officer of,
and cessation of employment with, the Company, (ii) the Executive’s resignation as a director and
officer of subsidiaries of the Company and (iii) the Executive’s release of claims, all upon the
terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, the
adequacy and sufficiency of which are hereby acknowledged, the Company and the Executive hereby
agree as follows:
1. Termination of Employment. The Executive hereby resigns as the President and Chief
Executive Officer of the Company and as a member of the Company’s board of directors, from all
directorships and offices of the Company’s subsidiaries and from all other positions (if any) with
the Company and its affiliates, effective as of the date hereof (the “Resignation Date”). On the
Resignation Date, the Executive shall cease to be a director, officer or employee of, or have any
other position with, the Company or its subsidiaries or any affiliate of the Company or its
subsidiaries.
2. Payment of Accrued Obligations.
(a) The Company shall pay all Accrued Obligations (as defined in Section 2(b) hereof) to the
Executive as soon as reasonably practicable following the Resignation Date; provided, however, that
any portion of the Accrued Obligations subject to plans or policies of the Company shall be
determined and paid in accordance with the terms of the relevant plan or policy as applicable to
the Executive.
(b) For purposes of this Agreement, “Accrued Obligations” shall mean, the following:
(i) the Executive’s current base salary through the Resignation Date to the extent not
theretofore paid;
(ii) any vacation pay and expense reimbursements accrued by the Executive as of the
Resignation Date to the extent not theretofore paid.
3. Additional Payments and Benefits. Provided that the Executive has not revoked the
release contained in Section 9 hereof, and provided further that the Executive complies with
Section 7 hereof, the Company shall make the payments and provide the benefits set forth in this
Section 3:
(a) During the period commencing on the day next following the Resignation Date and ending two
years following the Resignation Date, the Company shall pay to the Executive $210,000 per year,
payable in accordance with the Company’s regular payroll practices as then in effect. Upon a
Change of Control, as defined in the Employment Agreement, or upon liquidation of the Company, any
unpaid portion of remainder of the $420,000 in severance pay set forth above shall be paid by
Company to Executive in one lump sum. No bonuses of any kind will be paid to Executive from or
after the Resignation Date;
(b) The health insurance benefits currently being provided to the Executive by the Company
shall continue to be provided to the Executive by the Company during the period commencing on the
Resignation Date and ending two years following the Resignation Date, subject to any modifications
thereto applicable to active employees of the Company. During such period, the Company shall
deduct from amounts payable to the Executive amounts equal to the amounts that would have been
payable by the Executive for such coverage, and at the times such amounts would have been payable,
if the Executive had continued as an active employee of the Company;
(c) From and after the Resignation Date, upon any request by Executive, Company shall provide
Executive with a favorable employment recommendation;
(d) Subject to Company confidentiality and disclosure policies, Company will forward
Executive’s e-mail to an e-mail address of Executive’s choice and provide Company voicemail for a
period of two years from the Resignation Date;
(e) Company will arrange and pay for the commercial transport of Executive’s personal
belongings from the Company’s corporate apartment in Chicago, Illinois to Executive’s home.
(f) For a period of seventeen months from the Resignation Date, Executive may retain and
continue using the American Airlines airpass issued to Company in Executive’s name, subject to a
cap of $30,000 in airpass expenditures by Executive during this timeframe; and
(g) Effective as of the Resignation Date, Company hereby transfers to Executive the ownership
of Executive’s laptop personal computer. Furthermore, the
2
Company agrees to provide technical laptop support equivalent to that provided to other then
current Company executives for a period of two years from the Resignation Date.
4. Stock Options. Each option to purchase shares of the Company’s Common Stock granted to
the Executive, which shall remain exercisable on the effective date of the Executive’s resignation,
may thereafter be exercised for a period of 90 days from the Resignation Date, after which each
option shall expire without further action by the Executive or the Company and no payment shall be
made by the Company to the Executive in respect thereof.
5. COBRA Coverage. Pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), the Executive may elect to continue coverage for the Executive and his dependents under
the Company’s medical, dental and vision insurance policies for a period of up to 18 months
following the earlier of the second anniversary of the Resignation Date or the date on which the
Executive becomes employed, and the Executive shall pay all expenses relating to such coverage in
accordance with COBRA.
6. Federal and State Withholding. The Company shall deduct from the amounts payable to the
Executive pursuant to this Agreement the amount of all required federal and state withholding taxes
in accordance with the Executive’s Form W-4 on file with the Company and all applicable social
security taxes.
7. Noncompetition, Nondisclosure; Nonsolicitation and Transition. The Executive shall
comply with his obligations under Paragraph 8 of the Employment Agreement dated as of May 6, 2004,
as amended to date (the “Employment Agreement”), between the Executive and the Company for the time
periods (commencing on the Resignation Date) set forth in Paragraph 8 of the Employment Agreement.
For the 60 day period following the Resignation Date, upon Company request, Executive shall provide
reasonable transition assistance and cooperation, including, without limitation, with regard to
client relationships, sales leads, and employment matters. Company shall reimburse Executive for
all reasonable and necessary out-of-pocket expenses (including reasonable travel expenses) directly
related to Executive’s provision of this transition assistance.
8. Remedies; Scope of Covenants. The following provisions shall apply to the covenants of
the Executive contained in Section 7 hereof:
(a) without limiting the right of the Company to pursue all other legal and equitable remedies
available for violation by the Executive of the covenants contained in Section 7 hereof, it is
expressly agreed by the Executive and the Company that such other remedies cannot fully compensate
the Company for any such violation and that the Company shall be entitled, in addition to other
rights and remedies existing in its favor, to a restraining order or orders and other injunctive
relief to prevent any such violation or any continuing violation thereof;
3
(b) the Company and the Executive each intends and agrees that the covenants contained in
Section 7 hereof are reasonably designed to protect the Company’s trade secrets and other legally
protectable business interests without unnecessarily or unreasonably restricting the Executive’s
business opportunities, but that if in any action before any court or agency legally empowered to
enforce the covenants contained in Section 7 hereof any term, restriction, covenant or promise
contained therein is found to be unreasonable or otherwise unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency; and
(c) the Executive agrees that he will submit himself to the personal jurisdiction of the
courts of the State of Illinois in any action by the Company to obtain injunctive relief.
(d) Neither party shall initiate arbitration or other legal proceedings (except for any claim
under Paragraphs 7 and/or 8 of this Agreement for injunctive relief), against the other party, or,
in the case of Company, any of its directors, officers, employees, agents, or representatives,
relating in any way to this Agreement, the Employment Agreement, to Executive’s employment with the
Company, the termination of Executive’s employment or any or all other claims that one party might
have against the other party until 30 days after the party against whom the claim[s] is made
(“Respondent”) receives written notice from the claiming party of the specific nature of any
purported claim and the amount of any purported damages. Executive and Company further agree that
if Respondent submits the claiming party’s claim to the Center for Public Resources, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, for nonbinding mediation prior to the expiration of such 30 day
period, the claiming party may not institute arbitration or other legal proceedings against
Respondent until the earlier of (i) the completion of nonbinding mediation efforts, or (ii) 90
days after the date on which the Respondent received written notice of the claimant’s claim.
(e) Executive and Company agree that all claims or disputes relating to Executive’s employment
with Company or the termination of such employment, and any and all other claims that Executive
might have against Company, any Company director, officer, employee, agent, or representative, and
any and all claims or disputes that Company might have against Executive (except for any claims for
injunctive relief under Paragraphs 7 and/or 8 of this Agreement) shall be resolved in Chicago,
Illinois under the Expedited Commercial Rules of the American Arbitration Association. If either
party pursues a claim and such claim results in an Arbitrator’s decision, both parties agree to
accept such decision as final and binding. TSC and Employee agree that any action seeking
injunctive relief under Paragraphs 7 and/or 8 of this Agreement shall be brought in the courts of
Xxxx County, Illinois.
9. General Release. The Executive, on behalf of himself and anyone claiming through him,
hereby agrees not to xxx the Company or any of its divisions, subsidiaries, affiliates or
4
other related entities (whether or not such entities are wholly owned) or any of the past, present
or future directors, officers, administrators, trustees, fiduciaries, employees, agents or
attorneys of the Company or any of such other entities, or the predecessors, successors or assigns
of any of them (hereinafter referred to as the “Released Parties”), and agrees to release and
discharge, fully, finally and forever, the Released Parties from any and all claims, causes of
action, lawsuits, liabilities, debts, accounts, covenants, contracts, controversies, agreements,
promises, sums of money, damages, judgments and demands of any nature whatsoever, in law or in
equity, both known and unknown, asserted or not asserted, foreseen or unforeseen, which the
Executive ever had or may presently have against any of the Released Parties arising from the
beginning of time up to and including the date on which this Agreement is executed, including,
without limitation, all matters in any way related to the Executive’s employment by the Company or
any of its affiliates, the terms and conditions thereof, any failure to promote the Executive and
the termination or cessation of the Executive’s employment with the Company or any of its
affiliates, and including, without limitation, any and all claims arising under the Civil Rights
Act of 1964, as amended, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age
Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the Family and
Medical Leave Act, the Americans With Disabilities Act, the Employee Retirement Income Security Act
of 1974, the Illinois Human Rights Act, the Chicago or Xxxx County Human Rights Ordinance or any
other federal, state, local or foreign statute, regulation, ordinance or order, or pursuant to any
common law doctrine; provided, however, that nothing contained in this Section 9 shall apply to, or
release the Company from, any obligation of the Company (i) contained in this Agreement or in any
benefit plan of the Company in which the Executive participates or (ii) to indemnify the Executive
pursuant to the Company’s certificate of incorporation or by-laws. The consideration offered
herein is accepted by the Executive as being in full accord, satisfaction, compromise and
settlement of any and all claims or potential claims, and the Executive expressly agrees that he is
not entitled to, and shall not receive, any further recovery of any kind from the Company or any of
the other Released Parties, and that in the event of any further proceedings whatsoever based upon
any matter released herein, neither the Company nor any of the other Released Parties shall have
any further monetary or other obligation of any kind to the Executive, including any obligation for
any costs, expenses or attorneys’ fees incurred by or on behalf of the Executive. The Executive
agrees that he has no present or future right to employment with the Company or any of the other
Released Parties and that he will not apply for or otherwise seek employment with any of them.
10. Nondisclosure of this Agreement. The Executive agrees that unless and until the
Company discloses the terms of this Agreement to the public, the Executive will not disclose the
existence or terms of this Agreement to any third party, except his accountants, attorneys and
spouse, each of whom shall be bound by this nondisclosure provision, or as may be required to
comply with legal process; provided, however, that the Executive shall be entitled to disclose
fully the terms of Section 7 hereof to any employer or prospective employer of the Executive. If a
person not a party to this Agreement requests or demands, by subpoena or otherwise, that the
Executive disclose or produce this
5
Agreement or any terms or conditions hereof prior to the public disclosure thereof by the Company,
the Executive shall immediately notify the Company and shall give the Company an opportunity to
respond to such notice before taking any action or making any decision in connection with such
request or subpoena. The Executive understands and agrees that this nondisclosure requirement is a
material inducement to the Company to enter into this Agreement.
11. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of and be enforceable by the Executive and by
his personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive while any amounts are payable to
the Executive hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to such person or persons designated in writing by the
Executive to receive such amounts or, if no person is so designated, to the Executive’s estate.
(b) The Company’s obligations contained in this Agreement shall survive any Change in Control,
as defined in the Employment Agreement, and Company agrees to notify any potential acquirer of
these obligations.
12. Notices. All notices and other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given by a party hereto when
delivered personally or by overnight courier or five days after deposit in the United States mail,
postage prepaid to the following address of the other party hereto (or to such other address of
such other party as shall be furnished in accordance herewith):
If to the Company, to:
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to the Executive, to:
Xx. Xxxxxxx X. Xxxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxxxx, XX 00000
6
13. Governing Law; Validity. The interpretation, construction and performance of this
Agreement shall be governed by and construed and enforced in accordance with the internal laws of
the State of Illinois without regard to the principle of conflicts of laws.
14. Entire Agreement. This Agreement constitutes the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written or oral, which may
have related in any manner to the subject matter hereof, including, but not limited to, the
Employment Agreement, which shall have no further force or effect as of the date that the last of
the parties executes this Agreement, except for Paragraph 8 thereof as contemplated by Section 7
hereof.
15. Counterparts. This Agreement may be executed in two counterparts, each of which shall
be deemed to be an original and both of which together shall constitute one and the same
instrument.
16. Miscellaneous. No provision of this Agreement may be modified or waived unless such
modification or waiver is agreed to in writing and executed by the Executive and by a duly
authorized officer of the Company. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by the Executive or the Company
to insist upon strict compliance with any provision of this Agreement or to assert any right which
the Executive or the Company may have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
17. No Admission. Nothing in this Agreement is intended to, or shall be construed as, an
admission by the Company or any of the other Released Parties that it violated any law, interfered
with any right, breached any obligation or otherwise engaged in any improper or illegal conduct
with respect to the Executive or otherwise. The Company, for itself and the other Released
Parties, hereby expressly denies any such illegal or wrongful conduct.
18. ACKNOWLEDGMENT BY EXECUTIVE. BY EXECUTING THIS AGREEMENT, THE EXECUTIVE EXPRESSLY
ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT CAREFULLY, THAT HE FULLY UNDERSTANDS ITS TERMS AND
CONDITIONS, THAT HE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT,
THAT HE HAS BEEN ADVISED THAT HE HAS 21 DAYS WITHIN WHICH TO DECIDE WHETHER OR NOT TO EXECUTE THIS
AGREEMENT AND THAT HE INTENDS TO BE LEGALLY BOUND BY IT. DURING A PERIOD OF SEVEN DAYS FOLLOWING
THE DATE OF HIS EXECUTION OF THIS AGREEMENT, THE EXECUTIVE SHALL HAVE THE RIGHT TO REVOKE THE
RELEASE CONTAINED IN SECTION 9 OF
7
THIS AGREEMENT OF CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT BY SERVING WITHIN SUCH
PERIOD WRITTEN NOTICE OF REVOCATION. IF THE EXECUTIVE EXERCISES HIS RIGHTS UNDER THE PRECEDING
SENTENCE, HE SHALL FORFEIT ALL AMOUNTS PAYABLE TO HIM PURSUANT TO SECTION 3 OF THIS AGREEMENT.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized
officer of the Company and the Executive has executed this Agreement as of the day and year first
above written.
| TECHNOLOGY SOLUTIONS COMPANY | ||||||
| By | /s/XXXX X. XXXX, XX. | |||||
| Chairman & Acting C.E.O. | ||||||
| EXECUTIVE: | ||||||
| /s/XXXXXXX X. XXXXXXX | ||||||
8
