Exhibit 10.26
CONTINUING EMPLOYMENT AGREEMENT
This Continuing Employment Agreement ("Agreement ") is made effective as
of December 16, 1999 between xxxxxxxxx.xxx, Incorporated, a Delaware corporation
having an office located at Five Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000
(the "Company"), Xxxxxx Digital Corporation, a Connecticut corporation, having
an office located at Xxx Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("Xxxxxx
Digital") (the Company and Xxxxxx Digital are sometimes referred to herein
collectively as the "Companies"), and Xxxxxxx X. Xxxx, residing at 00 Xxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000 (the "Employee").
In consideration of the covenants and promises set forth below, the
Companies and the Employee, intending to be bound legally, agree as follows:
1. Resignation of Officer Positions and Change of Duties.
(a) The Employee hereby resigns as an officer and director of the Companies and
each subsidiary of the Companies effective as of the date hereof. The Company
acknowledges that the Employee shall not be considered an officer of the Company
for purposes of the Securities Exchange Act of 1934, as amended, including
Section 16(b) thereof, after the date hereof.
(b) The Companies and the Employee have mutually agreed that the Employee's
employment relationship with the Company shall continue from the date hereof and
shall terminate as of December 16, 2000 (the "Termination Date").
(c) For the period commencing on December 17, 1999 and ending on the Termination
Date, the Employee shall continue to serve as a non-officer employee of the
Companies. During this period, the Employee's duties as an employee will be only
those which are mutually agreed between her and the Companies, with the
Companies' decision as to such duties to be determined solely by Xxxx Xxxxxxx.
As a result, the Companies agree that notwithstanding any of the provisions of
the Employment Letter dated September 10, 1998 (the "Employment Letter"), the
Employee's employment with the Companies will not be terminated by the Companies
prior to the Termination Date.
2. Consideration. In exchange for a waiver and release, as set forth on Exhibit
A hereto, of any claims that the Employee has or may have against the Companies
and vice versa which the Employee and the Companies will deliver upon
execution of this Agreement, and in lieu of any other benefits to which the
Employee is or may be entitled under the Company's employment and severance
policies or under the Employment Letter, the Companies and the Employee have
agreed that Employee shall continue employment with the Company on the terms and
conditions set forth herein. As additional consideration for her continued
employment with the Company hereunder, the Companies and the Employee hereby
agree to execute an identical waiver and release with respect to the Company as
of the Termination Date.
(a) Salary Continuation. The Employee shall be entitled to continuation of base
salary of $200,000 per year, payable in accordance with the Company's regular
payroll practices, through the Termination Date, subject to Section 2(i) hereof.
(b) Bonus. The Employee shall be entitled to receive a bonus for fiscal year
1999, in the amount of $22,700, which bonus shall be paid by the Company no
later than December 31, 1999.
(c) Stock Options. The Employee currently holds unexercised options ("Employee
Options") to purchase an aggregate of 200,000 shares of Common Stock of the
Company ("Underlying Common Stock") granted pursuant to the xxxxxxxxx.xxx LLC
1997 Omnibus Plan ("1997 Omnibus Plan"), and in accordance with the
xxxxxxxxx.xxx LLC Non-Qualified Option Agreement Pursuant to the 1997 Omnibus
Plan, dated as of July 18, 1998 ("Option Agreement"). Notwithstanding anything
else to the contrary including the provisions of the 1997 Omnibus Plan or the
Option Agreement:
(i) 116,667 of the Employee Options are fully vested as of the date of
this Agreement Date (the "Current Vested Options");
(ii) 83,333 of the Employee Options will fully vest on June 1, 2000
without any risk of forfeiture (the "Future Vested Options").
Vesting of the Future Vested Options will occur simply with the
passage of time and the Future Vested Options will be fully vested
on June 1, 2000.
(iii) the Employee shall be entitled to exercise the Current Vested
Options, in whole or in part and from time to time, during the
period commencing with the date hereof and ending 90 days after the
Termination Date;
(iv) the Employee shall be entitled to exercise the Future Vested
Options, in whole or in part and from time to time, during the
period commencing on June 1, 2000 and ending 90 days after the
Termination Date;
(v) the Executive's execution and compliance with the terms of this
Agreement shall be deemed to constitute compliance with the
provisions of paragraphs 6(b), (c) and (d) of the Option Agreement
and any similar provisions of the 1997 Omnibus Plan;
(vi) subject to the limitations set forth in the letter between the
Employee and the Company dated July 18, 1999 (the "Lock-Up Letter")
and any policy of the Company in effect during the term of this
Agreement with respect to the sale by its employees of its Common
Stock, the Employee shall be entitled upon exercise of the Employee
Options to sell the Underlying Common Stock to the public pursuant
to the S-8 Registration Statement (Registration No. 333-83233) ("S-8
Registration Statement"), or another such Registration Statement
covering option shares which supercedes the S-8 Registration
Statement;
(vii) the Company agrees that Employee shall not be required to enter into
a new lock-up agreement after the expiration of the Lock-Up Letter;
(viii) the Company agrees that it will keep the S-8 Registration Statement
effective for the benefit of the Employee for the same period of
time as the same is kept effective for the benefit of any other
employee of the Company;
(ix) the Company agrees that it shall withhold from the number of shares
otherwise to be delivered upon exercise of the Employee Options a
number of shares of Underlying Common Stock having a fair market
value equal to or less than the Company's aggregate withholding tax
obligation with respect to exercise of the Employee Options;
(x) the Company agrees it will permit a cashless exercise of the
Employee Options, which means that assuming a simultaneous exercise
of the Employee Options and sale of some or all of the Underlying
Common Stock, Employee may deliver to the Company out of the sale
proceeds a sum equal to the exercise price and withholding tax
obligation for all Employee Options exercised.
Except as modified by this Agreement, the Employee shall be entitled to all the
other rights and benefits relating to the Employee Options which are set forth
in the 1997 Omnibus Plan and the Option Agreement.
(d) Xxxxxx Digital Options. The Employee shall be granted as of the date hereof
non-qualified stock options for 25,000 shares of Xxxxxx Digital common stock
pursuant to the Xxxxxx Digital 1999 Stock Option Plan (the "Xxxxxx Digital
Option Plan") at an exercise price per share of $1.00. Such options shall be
fully vested on grant and shall terminate on December 16, 2009 notwithstanding
anything else to the contrary in the Xxxxxx Digital Option Plan, and shall
otherwise have such terms and conditions as are set forth in the Xxxxxx Digital
Option Plan and any related stock option agreement.
(e) Medical and Dental Plans. The Employee shall be entitled to continuation of
group health benefits (medical and dental) as well as life and disability
insurance pursuant to the Company's standard programs as in effect from time to
time, in accordance with the terms of such plans as applicable to employees
generally, until the Termination Date. Thereafter, the Employee shall be
entitled to continuation of such benefits under the Company's standard programs
as in effect from time to time (or continuation of substantially similar
benefits, through a third party carrier, at the Company's election) for a period
of up to 18 months (or in the case of health benefits, such longer period as may
be required by COBRA), provided that the Employee makes any necessary conversion
and pays the full cost of the premium.
(f) Other Benefits. The Employee shall be entitled to continued participation in
all other employee and Employee benefits plans of the Company (other than the
right to participate in the Company's stock and option plans, except as
otherwise set forth in this Agreement) until the earlier of (i) the Termination
Date and (ii) such date that Employee accepts alternative employment with any
employer other than the Company or Xxxxxx Digital providing similar benefits.
Such benefits include without limitation the right to participate in the
Company's 401(k) plan, and workers' compensation and unemployment programs.
(g) Company Equipment. Notwithstanding the terms of the Confidentiality
Agreement referenced in Section 3 below, the Employee may keep her
Company-issued home computer, fax printer and cellular telephone (with continued
telephone service after the Termination Date at the Employee's cost). The
Employee will return any other Company equipment to the Company on or before the
Termination Date.
(h) Continued Indemnification and Insurance. As a former officer and employee of
the Companies, Employee shall continue to be entitled to the benefit of the
indemnification provisions contained in the Certificates of Incorporation and
By-Laws of the Companies with respect to any acts or omissions that occurred
during her tenure as an officer and employee. In addition, the Employee shall
continue to be entitled to the benefit of coverage under all director and
officer and professional risk/liability (legal malpractice) insurance policies,
maintained by the Company with respect to any acts or omissions that occurred
during her tenure as an officer and employee. At a minimum, the Company agrees
to keep and maintain such policies in full force and effect (and on terms no
less favorable then the terms now in effect) until such time as the Employee has
no legal or other liability for any acts or omissions that occurred during her
tenure as an officer and employee.
(i) Potential Loss of Salary. Notwithstanding the salary continuation set forth
in paragraph 2(a) above, the Employee agrees that if the Employee performs
services for any entity other than any of the Companies or is self-employed
during the period from June 16, 2000 to December 16, 2000, any amounts received
by the Employee that are recognized as income to the Employee for such period
from such other entity or from self-employment (other than income resulting from
the exercise of stock options, the grant or vesting of other equity awards or
other similar events, including the sale of Underlying Common Stock) will offset
on a dollar-for-dollar basis the Company's obligation to continue to make salary
payments to the Employee pursuant to paragraph 2(a). The Employee is under no
obligation to mitigate or seek employment prior to the Termination Date.
(j) No Severance or Other Benefits. The Company and the Employee agree that the
Employee will be entitled to no severance or other benefits except as expressly
set forth herein.
3. Confidentiality Agreement. The Employee acknowledges that the Employee's
obligations to the Company set forth in the Employee's Confidentiality
Agreement, dated September 10, 1998, remain in full force and effect and are not
diminished in any way by this Agreement. Any time periods contained in such
agreement for post-termination obligations shall be deemed to commence as of the
Termination Date.
4. Non-Disclosure. The Company and the Employee agree not to disclose the
provisions of this Agreement to any person or entity, with the exception of
counsel, accounting and tax advisors, Employee's immediate family, or as
required by applicable law. However, since the fact of Employee's resignation as
an officer of the Company requires public disclosure and the filing of a form
8-K report
with the Securities and Exchange Commission, the Company and the Employee agree
to cooperate in all such public disclosure and in the making of such 8-K filing,
with Employee to have approval authority over the content of such disclosure and
filing. In addition, the Employee shall have the right to approve communications
to personnel of the Companies and all other third parties concerning the
Employee's termination of employment with the Companies.
5. Mutual Non-Disparagement. The Employee and the Companies agree not to make
any statement, written or verbal, to any party reasonably likely to be harmful
to the other party or to be injurious to the goodwill, reputation or business
standing of the other party at any time in the future; provided, however, that
this non-disparagement clause shall not preclude any party or its agents or
representatives from any good faith response to any inquiries under oath or in
response to governmental inquiry.
6. Mutual Release of Claims with Respect to the Company. The Employee and the
Companies agree to deliver the Mutual Release of Claims and Waiver of Rights
document in the form attached hereto as Exhibit A both (i) on or prior to
December 16, 1999, to be effective as of such date and (ii) on or prior to the
Termination Date, to be effective as of such date.
7. Merger and Integration. Except as expressly set forth herein, all prior
understandings and agreements between the parties are merged into this
Agreement, which collectively with the Mutual Release of Claims and Waiver of
Rights, express the complete understanding and agreement between the parties.
8. Advice of Counsel. The Employee acknowledges and represents that the Employee
has had the opportunity to obtain the advice of counsel, and is entering into
this Agreement after carefully considering the legal ramifications thereof. The
Employee acknowledges and represents that the Employee is entering into these
agreements voluntarily, knowingly of the Employee's own free will, and without
undue influence or duress.
9. Headings. The section headings contained in this Agreement are for
convenience of reference only, are not intended to be a part of this Agreement
and shall not be construed to define, modify, alter or describe the scope or
intent of any of the terms, covenants or conditions of this Agreement.
10. Severability. If any term or provision of this Agreement or the application
thereof to any person, entity or circumstance shall to any extent be determined
by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of this Agreement, or the application of such terms or provision to
such person, entity or circumstance other than those that are held invalid or
unenforceable, shall not be affected thereby, and each other term and provision
shall be valid and enforced to the fullest extent permitted by law. The parties
authorize the court to reduce in scope or modify, if possible, all invalid or
unenforceable provisions, so that they become valid or enforceable.
11. Successors. This Agreement shall be binding upon, and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Connecticut as they apply to contracts
entered into and wholly to be performed within such state by residents thereof.
13. Authorization.
(a) The Companies have full power and authority to execute and deliver this
Agreement and the Mutual Release of Claims and Waiver of Rights and to
consummate the transactions contemplated hereby. All actions required to be
taken by the Companies, including obtaining the approval by the Boards of
Directors and the Option Committees of the respective Companies, in order to
authorize the Companies to execute this Agreement and the Mutual Release of
Claims and Waiver of Rights and to perform their obligations hereunder and to
consummate the transactions contemplated hereby have been duly and properly
taken. When executed and delivered by the appropriate officers of the Companies
this Agreement and the Mutual Release of Claims and Waiver of Rights shall
constitute the legal and binding obligations of the Companies enforceable in
accordance with its terms.
(b) This Agreement and the Mutual Release of Claims and Waiver of Rights do not
violate any provision of the Certificate of Incorporation or By-laws or the
Operating Agreement of the Companies, nor does it violate any material provision
of, or result in any material default or acceleration of any material
obligations under, result in the creation or imposition of any material lien
pursuant to, or require any consent under any material agreement to which the
Companies are a party or by which the Companies are bound.
(c) The Employee has full power and authority to execute and deliver this
Agreement and the Mutual Release of Claims and Waiver of Rights and to
consummate the transactions contemplated hereby. When executed and delivered by
the Employee, this Agreement and the Mutual Release of Claims and Waiver of
Rights shall constitute the legal and binding obligations of the Employee
enforceable in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the 16th
day of December, 1999.
The Companies
xxxxxxxxx.xxx, Incorporated
(THE COMPANY)
By:
__________________________________
its ______________________________
Xxxxxx Digital Corporation
(XXXXXX DIGITAL)
By:
__________________________________
its ______________________________
The Employee
__________________________________
DATE SIGNED: _______________
State of Connecticut
ss.
County of
Personally appeared ______________________, the signer and sealer of the
foregoing Agreement, who acknowledged the same to be his free act and deed
before me.
Notary Public
My Commission Expires:
Exhibit A
MUTUAL RELEASE OF CLAIMS AND WAIVER OF RIGHTS
1. Mutual Release of Claims. (a) Xxxxxxx X. Xxxx (the "Employee"), on behalf of
the Employee and the Employee's heirs, executors, administrators,
representatives, successors and assigns (such other persons being collectively
referred to for the purposes of this document as the "Employee Persons"), in
consideration of the terms and conditions set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby remises, releases and forever discharges xxxxxxxxx.xxx,
Incorporated (the "Company") and Xxxxxx Digital Corporation ("Xxxxxx Digital")
(the Company and Xxxxxx Digital are sometimes referred to herein collectively as
the "Companies") and their respective parents, subsidiaries, affiliated
corporations, successors and assigns and their respective officers, directors,
shareholders, employees and agents (such other persons being collectively
referred to for the purposes of this document as the "the Company Persons"), and
(b) the Companies, on behalf of themselves and the Company Persons, in
consideration of the terms and conditions set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby remise, release and forever discharge the Employee and the
Employee Persons, in each case, from any and all claims, damages, actions,
causes of action, losses, liabilities, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, judgments, extents,
executions, costs and expenses of any nature whatsoever, except for the
obligations set forth in the Continuing Employment Agreement dated as of
December 16, 1999 between the Employee and the Companies ("Continuing Employment
Agreement"), but including, without limitation, court costs and attorneys' fees,
whether or not now known, claimed or suspected, fixed or contingent, in law or
in equity (hereinafter collectively referred to as "Claims") which the
respective releasing party (in each case, the "Releasor") now has, has ever had,
has ever claimed to have had or may have against the respective released party
(in each case, the "Releasee") from the beginning of the world to the date of
the execution of this Mutual Release of Claims, including without limitation:
any and all Claims for violation of the common law, including, but not limited
to, wrongful discharge of employment, breach of contract -- express or implied,
negligent or intentional infliction of emotional distress, negligent or
intentional misrepresentations, negligence, slander, defamation or
self-defamation; any and all Claims that Employee may have to acquire any
securities of the Company; any and all Claims for violation of any federal,
state, local or municipal rule, regulation or statute, including, but not
limited to, the Age Discrimination in Employment Act of
1967, 29 U.S.C.ss.621 et seq. (the "ADEA"), Title VII of the Civil Rights Act of
1964, 42 U.S.C.ss.2000 et seq., the Americans with Disabilities Act of 1990, 42
U.S.C.ss.12101, et seq., the Family and Medical Leave Act of 1993, 29 X.X.X.xx.
2601, et seq., the Equal Pay Act of 1963, the Fair Labor Standards Act of 1938,
29 U.S.C. ss.201, the Civil Rights Act of 1991, the Employee Retirement Income
Security Act of 1974, 29 U.S.C.ss.201 et seq., the Connecticut Fair Employment
Practices Act, Conn. Gen Stat. 46a-60 et seq., and the Connecticut Wage and Hour
Law, Conn. Gen. Stat. 31-70 et seq., each as amended; any and all Claims for
violation of any public policy having any bearing whatsoever on the terms or
conditions of the Employee's employment or cessation of employment with the
Companies; any and all Claims arising directly or indirectly out of the
Employee's employment by the Companies; and any and all Claims for attorneys'
fees and costs. Each Releasor further agrees that she or it will not seek or be
entitled to any personal recovery in any Claim whatsoever against any Releasee
for any of the matters set forth in this paragraph.
Except with respect to the specific obligations of the parties specified
in the Continuing Employment Agreement, all prior understandings and agreements
between the parties are merged into this Agreement, which constitutes the
complete understanding and agreement between the parties.
Each Releasor acknowledges that certain states provide that a general
release of claims does not extend to claims which the Releasor does not know or
suspect to exist in the Releasor's favor at the time of executing the release
which, if known by the Releasor may have materially affected the Releasor's
entering into the release of claims. Being aware that such statutory protection
may be available to the Releasor, each Releasor expressly, voluntarily and
knowingly waives any arguable benefit or protection of any such statute in
executing this Mutual Release of Claims, known or unknown.
Each Releasor further acknowledges that the Releasor's signature below
signifies that the Releasor is entering into this Mutual Release of Claims
freely, knowingly and voluntarily with a full understanding of its terms.
This Release may not be changed orally.
2. Waiver of Rights. The Employee understands that there are various state,
federal and local laws that prohibit employment discrimination on the basis of,
among other things, age, sex, race, national origin, religion and disability and
that these laws are enforced by various government agencies. The Employee
intends to waive and hereby does waive any right that the Employee may have to
seek or be entitled to any personal recovery against the Companies under the Age
Discrimination in Employment Act of 1967 as amended (the "ADEA"), and under
any other laws regarding employment discrimination with respect to her
employment with the Companies. The Employee acknowledges and understands that
the release of claims under the ADEA is subject to special waiver protections
under 29 U.S.C. 626(f). In accordance with that section, the Employee
specifically agrees that the Employee is knowingly and voluntarily releasing and
waiving any rights or claims of discrimination under the ADEA. The Employee
specifically acknowledges that the waiver of rights contained herein and the
Mutual Release of Claims fully comply with 29 U.S.C. ss. 626(f) in that:
(i) the waiver and Release of Claims are part of an Agreement between
the Employee and the Company and are fully understood by the
Employee;
(ii) the waiver and Release of Claims specifically refer to rights or
claims arising under the ADEA;
(iii) this waiver and the Release of Claims do not apply to any rights
arising after the date of execution of this Agreement;
(iv) the Employee is waiving rights or claims for age discrimination
under the ADEA in exchange for the consideration described in the
Continuing Employment Agreement, which provides additional value
relative to anything of value to which the Employee already is
entitled;
(v) the Employee has been advised in writing to consult with an attorney
prior to executing this Agreement and has in fact consulted with an
attorney of her choice;
(vi) the parties agree that the Employee has had at least twenty-one (21)
days within which to consider this Agreement;
(vii) this Agreement provides the Employee with a period of 7 days
following the execution of this Agreement to revoke the Agreement;
and
(viii) this Agreement will not become effective until the revocation
period set forth in the preceding clause (vii) shall have expired.
3. Rescission Period; Effective Date.
THIS AGREEMENT SHALL NOT BECOME EFFECTIVE AND ENFORCEABLE UNTIL THE EIGHTH DAY
AFTER THE DATE THIS AGREEMENT IS
EXECUTED BY THE EMPLOYEE. THE PARTIES UNDERSTAND AND AGREE THAT THE EMPLOYEE MAY
REVOKE THIS AGREEMENT AFTER HAVING EXECUTED IT BY SO ADVISING THE COMPANIES IN
WRITING, PROVIDED SUCH WRITING IS RECEIVED BY THE COMPANIES BY 11:59 P.M. ON THE
SEVENTH DAY AFTER THE DATE OF EXECUTION OF THIS AGREEMENT. SUCH NOTICE OF
REVOCATION MUST BE DELIVERED TO THE ATTENTION OF _____________________ AT
_____________________.
IF THE EMPLOYEE DOES NOT ELECT TO REVOKE THIS AGREEMENT WITHIN THE SEVEN DAY
REVOCATION PERIOD REFERRED TO IN THE PRECEDING PARAGRAPH, THIS RELEASE OF CLAIMS
SHALL BECOME EFFECTIVE AND ENFORCEABLE AT 12:00 A.M. ON THE EIGHTH DAY AFTER THE
DATE THAT THE EMPLOYEE EXECUTES THIS AGREEMENT (SUCH DATE OF EFFECTIVENESS BEING
REFERRED TO AS THE "EFFECTIVE DATE").
IN WITNESS WHEREOF, the parties hereto have executed this Mutual Release
of Claims and Waiver of Rights as of the 16th day of December, 1999.
The Companies
xxxxxxxxx.xxx, Incorporated
(THE COMPANY)
By:
__________________________________
its ______________________________
Xxxxxx Digital Corporation
(XXXXXX DIGITAL)
By:
__________________________________
its ______________________________
The Employee
__________________________________
DATE SIGNED: _______________
State of Connecticut
ss.
County of
Personally appeared ____________, the signer and sealer of the foregoing
Agreement, who acknowledged the same to be his free act and deed before me.
Notary Public
My Commission Expires:
IN WITNESS WHEREOF, the parties hereto have executed this Mutual Release
of Claims and Waiver of Rights as of the 16th day of December, 1999.
The Companies
xxxxxxxxx.xxx, Incorporated
(THE COMPANY)
By:
__________________________________
its ______________________________
Xxxxxx Digital Corporation
(XXXXXX DIGITAL)
By:
__________________________________
its ______________________________
The Employee
__________________________________
DATE SIGNED: _______________
State of Connecticut
ss.
County of
Personally appeared ____________, the signer and sealer of the foregoing
Agreement, who acknowledged the same to be his free act and deed before me.
Notary Public
My Commission Expires:
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