EXHIBIT 10.12
SEPARATION, CONSULTING AND RELEASE AGREEMENT
This Separation, Consulting and Release Agreement (the "Agreement") is made
and entered into this 13th day of September, 2004, effective as of the 1st day
of September, 2004 (the "Agreement Effective Date"), by and between U.S. Gas &
Electric, Inc. (the "Company") and Xxx Xxxxxxx ("Secunda").
RECITALS
Secunda has been providing services to the Company as Chief Executive
Officer of the Company; and
The Company and Secunda have agreed that Secunda's employment with the
Company shall cease as of the Agreement Effective Date; and
The Company and Secunda have agreed that Secunda shall remain as an
independent consultant to the Company and its subsidiaries for an additional
period of time on the terms set forth herein; and
Secunda acknowledges that in connection with his employment with the
Company (and in the future in connection with his providing consulting services
to the Company), he has been given access to (or will in the future be given
access to) certain confidential and proprietary information relating to the
Company and its business operations, and in connection with the cessation of
Secunda's employment with the Company, the parties wish to confirm certain
understandings with respect thereto.
TERMS OF AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. End of Employment Period. The parties mutually agree that effective on
the Agreement Effective Date:
a. Secunda shall no longer be an employee of the Company;
x. Xxxxxxx shall resign and shall no longer be an officer or director of
the Company;
c. Except as set forth herein, the parties hereby release each other from
any and all further obligations under any existing agreements or
understandings between them with respect to Secunda's employment with
the Company, including that certain Employment Agreement dated as of
March 18, 2002 and any amendments thereto;
d. The 2,000,000 shares of the Company's issued and outstanding common
stock that were previously issued to Secunda for services will be
cancelled (and
Secunda shall deliver the certificate(s) representing such shares to
the Company for cancellation); and
e. All stock options and any other rights to purchase securities of the
Company held by Secunda shall be cancelled.
2. Consulting Agreement.
a. From and after the Agreement Effective Date until August 31, 2005 (the
"Consulting Period"), Secunda agrees to act as a part time consultant
to the Company. Without limiting the foregoing, Secunda shall assist
the Company with such matters and projects as are assigned to him from
time to time by the Company's Chief Executive Officer, including
matters relating to the Company's contemplated Reorganization (as
defined below).
b. During the Consulting Period, the Company shall continue to make
available to Secunda the use of an office and computer, and the
Company shall continue to reimburse Secunda for such of his
out-of-pocket expenses relating to his services as a consultant to the
Company as are approved in advance by the Company's Chief Executive
Officer.
c. During the Consulting Period, Secunda shall receive the following
compensation:
(i) a gross monthly consulting fee of $3,000, payable in arrears,
with the first payment due on September 30, 2004 and each month
thereafter on the same date (Secunda shall be responsible for all
taxes with respect to such compensation);
(ii) a $30,000 bonus upon the Company's successful completion of
the Reorganization; and
(iii) 5% of the Class B Management Shares or such other shares as
are issued to the Company's management in connection with the
Reorganization.
3. Reorganization. Secunda acknowledges that the Company is currently
preparing to make an offer to its investors (including within that group those
investors who purchased interests in the three drilling programs sponsored by
the Company) to reorganize the Company's debt and equity in an out-of-court
reorganization (the "Reorganization") in order to deal with certain rescission
obligations that the Company purportedly has to the investors. In connection
with the Reorganization, Secunda agrees as follows:
a. Secunda will support the Company's efforts to complete the
Reorganization and will use his good faith commercially reasonable
efforts to assist the Company's management in seeking the approval of
the Company's investors to the terms of the Reorganization;
b. The MJL Trust ("Trust") is the owner of 12,000,000 shares (the
"Shares") of the Company's issued and outstanding common stock. To his
knowledge and belief,
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Secunda is the ultimate beneficial owner (for SEC purposes) of the
Shares owned by the Trust and has the power to vote and dispose of the
Shares on behalf of the Trust. With respect to the Trust and the
Shares, Secunda agrees as follows:
(i) Effective as the Agreement Effective Date, Secunda shall
transfer such rights as he has in the Trust and in the Shares, and
thereby his rights to control the voting and disposition of the Shares
held by the Trust, to Xxxx Xxxxxxxx, for the benefit of all of the
Company's shareholders. In furtherance of this objective, Secunda
agrees to deliver all documents in his possession (including the
certificate(s) representing the Shares) relating to the Trust and the
Shares and to execute any and all documents as may be reasonably
required to effect this transfer of control; and
(ii) Effective as of the effective date of the Reorganization,
and as part of the Reorganization, Secunda agrees that the Shares
shall be cancelled (and in that regard, Secunda agrees to deliver the
certificate(s) representing the Shares to the Company and to execute
such documents as are reasonably required to the effect this
cancellation).
c. During 2003 and 2004, Secunda made an unsecured subordinated loan (the
"Loan") to the Company on the terms forth in that certain Promissory
Note dated November 12, 2003. At the Agreement Effective Date, the
principal amount of the Loan was $84,900, plus accrued but unpaid
interest through that date. The Loan is subordinated to all creditor
claims, including rescission claims of holders of the Company's
securities (and the securities of the three drilling programs
sponsored by the Company). The Loan matures on the earlier of the
completion of the Reorganization or the successful payment in full of
all rescission claims due to the investors. Secunda agrees, with
respect to the Loan:
(i) to subordinate his loan to any secured financing of the
Company, and to execute a subordination agreement with respect to
any and all secured financing to the extent and on such form as
is reasonably required by the lender; and
(ii) upon the effective date of the Reorganization, to convert
all outstanding principal and interest due under the Loan at that
date into shares of the Company's common stock. While the terms
of the conversion have not yet been finalized, Secunda agrees to
convert the Loan at the same conversion price at which unrelated
note-holders convert their loans into equity, or, if no unrelated
note-holders convert their loans to equity as part of the
reorganization, at such price as is determined between the
Company and Secunda.
4. Definitions. The terms below shall have the following meanings when used
throughout this Agreement:
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a. "Confidential Documents" shall mean and include all files, letters,
memoranda, reports, records, computer disks or other computer storage
medium, data models or any photographic or other tangible materials
containing Confidential Information, whether created by the Company,
Secunda or any other party, and all copies, excerpts and summaries
thereof which shall come into the custody or possession of Secunda.
b. "Confidential Information" shall mean and include all information
whether written or oral, tangible or intangible, of a private, secret,
proprietary or confidential nature, of or concerning the Company and
its business and operations, including, without limitation, any trade
secrets or know-how, computer software programs in both source code
and object code form (including, without limitation, Programs) and any
rights relating thereto, information relating to any product (where
actual or proposed), development (including any improvement,
advancement or modification thereto), technology, technique, process
or methodology, any sales, promotional or marketing plans, programs
techniques, practices or strategies, any expansion plans (including
existing and entry into new geographic and/or product markets), any
operational and management guidelines, any corporate and commercial
policies, any cost, pricing or other financial data or projections,
the identity and background of any customer, prospect or supplier, and
any other information which is to be treated as confidential because
of any duty of confidentiality owed by the Company to a third party or
any other information that the Company shall, in the ordinary course
of business, possess or use and not release externally without
restriction on use or disclosure.
c. Notwithstanding the foregoing, Confidential Information shall not
include any information that (i) becomes available to Secunda from a
source other than the Company that is not bound by a duty of
confidentiality to the Company, (ii) becomes generally available or
known in the industry other than as a result of its disclosure by
Secunda, or (iii) has been independently developed by Secunda after
the end of the Consulting Agreement and may be disclosed by him
without breach of the Agreement, provided, in each case, that Secunda
shall bear the burden of demonstrating that the information falls
under one of the above-described exceptions.
d. "Programs" shall mean certain routines, object and source codes,
specifications, flowcharts and other material and documentation,
together with all information data and know-how, alterations,
corrections, improvements and upgrades thereto.
5. Treatment of Confidential Information.
a. Ownership and Implied Rights. Secunda acknowledges that all
Confidential Information and Confidential Documents are and shall
remain the exclusive property of the Company, and nothing in this
Agreement or any document relating to Secunda's employment or
consulting relationship with the Company or any course of conduct
between the Company and Secunda shall be deemed to
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xxxxx Xxxxxxx any right in or to all or any portion of the
Confidential Information or Confidential Documents.
b. Use and Disclosure. Secunda agrees that he shall: (i) hold the
Confidential Information and Confidential Documents in confidence and
refrain from disclosing the Confidential Information or transmitting
any Confidential Documents to any other party; (ii) take all
reasonable precautions necessary to ensure that the Confidential
Information and Confidential Documents shall not be, or be permitted
to be, shown, copied or disclosed to third parties, without the prior
written consent of the Company; and (iii) observe all security
policies implemented by the Company from time to time with respect to
the Confidential Information and Confidential Documents. The Company
agrees to notify Secunda of any additional or changed security
policies with respect to the Confidential Information and Confidential
Documents in the manner it generally notifies its employees.
c. Return of Confidential Documents and Company Property. Secunda shall
return all Confidential Documents to the Company (without retaining
any copies, computer files, extracts or other reproductions in whole
or in part thereof) upon execution of this Agreement. Further, Secunda
shall return any and all Company property in his possession upon
termination of the Consulting Period.
d. Ordered Disclosure. In the event that Secunda is ordered to disclose
any Confidential Information and Confidential Documents, whether in a
legal or regulatory proceeding or otherwise, Secunda shall provide the
Company with prompt notice of such request or order so that the
Company may seek to prevent disclosure or, if that cannot be achieved,
the entry of a protective order or other appropriate protective device
or procedure in order to assure, to the extent practicable, compliance
with the provisions of this Agreement. In the case of any disclosure,
Secunda shall disclose only that portion of the Confidential
Information or Confidential Documents that he is ordered to disclose.
6. Agreement Not to Compete. Secunda acknowledges that in connection with
his employment with the Company, he had access to Confidential Documents,
Confidential Information, and the Company's customers, suppliers and employees,
all of which have substantial competitive value to the Company and as to which
the Company has a legitimate business interest in protecting. For good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Secunda agrees that for a period commencing on the Agreement
Effective Date and ending on the date which is one year after the end of the
Consulting Period, he shall not directly or indirectly:
a. in the United States, engage or participate in, or assist, advise or
be connected with (including as an owner, joint venturer, partner
officer, director, employee, consultant, agent, independent
contractor, security holder, lender or, without limitation by the
specific enumeration of the foregoing, otherwise), any person, entity
or business enterprise involved in a business that is competitive with
any current or former business of the Company; provided, however, that
the beneficial
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ownership of less than five percent (5%) of any class of securities of
any entity having a class of equity securities actively traded on a
national securities exchange or over-the-counter market shall not be
deemed, in and of itself, to violate the prohibitions of this section;
and
b. except in connection with assisting the Company in completing the
Reorganization, solicit, attempt to solicit or aid in the solicitation
of any investor of the Company or of the drilling programs sponsored
by the Company, or induce, request or advise any vendor or supplier of
the Company to withdraw, curtail or cancel any of its business with
the Company.
7. Agreement Not to Disparage.
a. Secunda agrees not to make any statements which disparage the Company
or its officers, directors, employees, products or services, or use
the name of the Company in a manner which, in the Company's reasonable
judgment, may diminish or otherwise damage the Company's reputation or
goodwill. Secunda further agrees not to discuss Company activities,
plans or other matters (whether or not such activities are covered by
the provisions of this Agreement) with anyone other than the Company's
Chief Executive Officer and persons expressly designated by the
Company's Chief Executive Officer.
b. The Company agrees not to make any statements which disparage Secunda
or his prior services to the Company, nor to make any statements which
may diminish or otherwise damage Secunda's reputation or goodwill.
8. Remedies Upon Breach.
a. Secunda acknowledges that his service with the Company was of a
special and unique character and places him in a position of trust and
confidence with the Confidential Information and Confidential
Documents and with the employees, customers and suppliers of the
Company, and that the Confidential Information and Confidential
Documents are of a special and unique character that give them a
peculiar value, and, as a result, any breach of Secunda's obligations
under this Agreement may cause the Company great and irreparable
injury that cannot be adequately compensated by the payment of damages
in an action at law. Accordingly, upon the breach by Secunda of any of
his covenants under this Agreement, including without limitation the
provisions of Sections 5, 6 and 7, the Company's obligations to pay
any amounts pursuant to Section 2 hereof shall immediately terminate,
and all other obligations of the Company under this Agreement shall
immediately terminate; in addition, the Company shall be entitled to
the remedies of injunction, specific performance and other equitable
relief to redress any breach, or to prevent any threatened breach (and
the Company shall not be required to post any bond or prove special
damages) of this Agreement, and in the event that the Company
successfully obtains injunctive relief or other remedies as a result
of a breach or threatened breach of this Agreement, Secunda shall pay
any and all costs and expenses (including
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reasonable attorneys' fees and expenses) incurred by the Company in
enforcing its rights hereunder. Nothing contained in this Agreement
shall, however, be construed as a waiver by the Company of any right,
including, without limitation, the Company's right to seek and obtain
a damages for breach of this Agreement.
9. Indemnification. The Company agrees that after the Agreement Effective
Date, Secunda shall continue to have such indemnification rights as he had prior
to such date, in accordance with Delaware law and the Company's Articles of
Incorporation and By-Laws.
10. Release by Secunda of Employment Claims. Secunda hereby releases and
forever discharges the Company, its subsidiaries, parent and affiliated
companies and its respective shareholders, officers, directors, employees,
agents, attorneys, successors and assigns from any and all manner of claims,
debts, demands, damages, liabilities and causes of action, whether known or
unknown which Secunda or Secunda's heirs and personal representatives may have
had, may presently have or claim to have, arising from the beginning of the
world through the date hereof, relating to Secunda's employment by the Company,
any predecessor, successor or other related entity, or the termination of that
employment including, but not limited to, causes of action arising under or
related to any state or federal discrimination laws, including but not limited
to, Title VII of the Civil Rights Act of 1963, as amended (42 U.S.C. Section
2000e, et. seq.), the Fair Labor Standards Act of 1983 (29 U.S.C. Section 201
et. seq.), the Employee Retirement Income Security Act of 1974 ("ERISA") (29
U.S.C. Section 10001 et. seq.), the Age Discrimination in Employment Act
("ADEA") (29 U.S.C. Section 621 et. seq.), the Americans with Disabilities Act
("ADA") (42 U.S.C. Section 12101 et. seq.) and claims which have arisen on
matters governed by state and local laws and regulations, including, but not
limited to, claims for wages, separation pay or accrued benefits, claims which
have arisen under the Florida Civil Rights Act of 1992 (Section 760.01 et. seq.,
Florida Statutes), any Workers' Compensation Law, RICO, racketeering,
obstruction of justice, wire fraud, and claims of libel, slander, breach of
contract, wrongful discharge, impairment of economic opportunity, and including,
but not limited to, all claims of personal injury, including mental and physical
pain and suffering, intentional infliction of emotional distress and any other
actions in tort or contract.
11. General Releases. Effective upon the consummation of the
Reorganization:
a. Secunda hereby releases and forever discharges the Company, its
subsidiaries, parent and affiliated companies and its respective
shareholders, officers, directors, employees, agents, attorneys,
successors and assigns from any and all manner of claims, debts,
demands, damages, liabilities and causes of action, whether known or
unknown which Secunda or Secunda's heirs and personal representatives
may have had, may presently have or claim to have, arising from the
beginning of the world through the date hereof; provided, however,
that the indemnification rights provided by Section 9 shall continue
after the effective date of the Reorganization.
b. the Company hereby releases and forever discharges Secunda, his heirs,
attorneys, successors and assigns from any and all manner of claims,
debts, demands, damages, liabilities and causes of action, whether
known or unknown which the
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Company may have had, may presently have or claim to have, arising
from the beginning of the world through the date hereof.
12. Assignment. This Agreement shall be binding on and inure to the benefit
of the parties and their successors and permitted assigns. The Company may
assign its rights and obligations under this Agreement without consent of
Secunda to a successor of the Company organized in connection with and to
effectuate the Reorganization. Secunda may not assign any of his rights or
obligations under this Agreement without the prior written consent of the
Company.
13. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Florida, without regard to its
principles of conflict of laws. The parties agree that any action, suit or
proceeding arising out of or relative to this Agreement or the relationship of
Secunda and the Company shall be instituted only in the state or federal courts
located in Dade County, in the State of Florida, and each party waives any
objection which such party may now or hereafter have to such venue or
jurisdictional court in any action, suit or proceeding. All service of process
and any other notice in any such action, suit or proceeding shall be effective
against any party if given by mail (registered or certified where possible,
return receipt requested), postage prepaid, mailed to such party at the address
set forth herein. Secunda also agrees that all documents he has executed or will
execute in the future and all policies and procedures of the Company in
connection with Secunda's employment relationship with the Company are governed
by the laws of the State of Florida.
14. Waiver, Severability. Any failure on the part of the Company to insist
upon the performance of this Agreement or any part hereof shall not constitute a
waiver of any right under this Agreement. No waiver of any provision of this
Agreement shall be effective unless in writing and executed by the party waiving
the right. The parties agree that the covenants included in this Agreement are,
taken as a whole, reasonable in their duration and scope, and necessary to
protect the legitimate business interests of the Company, and it is the desire
and intent of the parties that the provisions of this Agreement shall be
enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If, in any judicial
proceeding, a court shall refuse to enforce all or any part of the separate
covenants included in this Agreement, then such unenforceable covenant shall be
deemed modified to the extent necessary to permit the remaining covenants to be
enforced.
15. Applicability. This Agreement expresses the entire agreement between
Secunda and the Company with respect to the subject matter of this Agreement and
supersedes all prior oral or written understandings or agreements regarding that
subject matter. This Agreement shall amend and shall hereby be incorporated into
any existing contract, agreement, arrangement or understanding between the
Company and Secunda. This Agreement shall not merge into, but shall survive any
subsequent contract, agreement or deed unless expressly referenced therein. This
Agreement may only be amended in a writing signed by both of the parties hereto.
16. Waiver of Jury Trial. IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING,
WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS OR RELATES TO THIS
AGREEMENT, ANY TRANSACTIONS CONTEMPLATED HEREUNDER, THE PERFORMANCE HEREOF OR
THE
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RELATIONSHIP CREATED HEREBY, WHETHER SOUNDING IN CONTRACT, TORT, STRICT
LIABILITY OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT JURISDICTION AND
NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT (STATUTORY,
CONSTITUTIONAL, COMMON LAW OR OTHERWISE) IT MAY HAVE TO A TRIAL BY JURY. ANY
PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE OTHER PARTIES' RIGHT TO TRIAL BY
JURY. NO PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS BY ANY OTHER
PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND
UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION.
[SIGNATURES ON NEXT PAGE]
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SIGNATURE PAGE TO SEPARATION, CONSULTING AND RELEASE AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement this ___ day
of September, 2004.
/s/ Xxx Xxxxxxx
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XXX XXXXXXX
Address:
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-------------------------------
Fax: ( )
---- ------------------------
STATE OF ____________________________ )
) SS:
COUNTY OF ___________________________ )
The foregoing instrument was acknowledged before me this ____ day of
September, 2005, by _____________________, who is personally known to me or who
has produced ___________________ (type of identification) as identification.
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NOTARY PUBLIC, STATE OF
----------------------------------------
(Print, Type or Stamp Commissioned
Name of Notary Public)
U.S. GAS & ELECTRIC, INC.
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx, Chief Executive
Officer
Address: x/x Xxxxxxx, Xxxxxxxxxx &
Xxxxxx, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
STATE OF ____________________________ )
) SS:
COUNTY OF ___________________________ )
The foregoing instrument was acknowledged before me this ____ day of
September, 2005 by ______________________, of _______________, on behalf of the
corporation. He/she is personally known to me or has produced _________________
(type of identification) as identification.
----------------------------------------
NOTARY PUBLIC, STATE OF
----------------------------------------
(Print, Type or Stamp Commissioned
Name of Notary Public)
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