SEVERANCE AGREEMENT AND RELEASE
Exhibit 10.1
SEVERANCE AGREEMENT AND RELEASE
THIS SEVERANCE AGREEMENT AND RELEASE is made this 4th day of November, 2008, by and between
Xxxxxxxx Xxxxxxx (“Employee”) and RCN Telecom Services, Inc. (“Employer” or “Company”), together
with each and every one of its predecessors, successors, directors, officers, employees and agents,
whether present or former (collectively the “Releasees”).
WHEREAS, Employee had been employed by Employer until November 4, 2008 (“Separation Date”);
WHEREAS, the parties desire that Employee’s separation be on an amicable basis;
In consideration of the mutual covenants and obligations contained herein, Employee and
Employer, each intending to be legally held bound, agree as follows:
1. Consideration. In consideration for the releases and other covenants set forth in
this Severance Agreement and Release, the Company agrees:
a. To pay the Employee his base salary through November 7, 2008;
b. To pay Employee as severance the gross amount of $187,500 less applicable withholdings
(“Severance Payment”), with such amount to be paid in the form of a lump sum payment no later
November 30, 2008.
c. The Employer will continue the Employee’s participation in all medical, dental and vision
plans in which the Employee was enrolled as of the Separation Date. The Company will continue the
coverage and pay that portion of the premium paid by the Company during Employee’s employment for
the shorter period of twelve (12) months, or until such time as Employee becomes eligible for
benefit coverage through another employer or otherwise (“Benefits Expiration Date”). Employee’s
aggregate portion of the costs for any such continued benefits through the Benefits Expiration Date
shall be deducted in a lump sum from the Severance Payment. Employee is obligated to inform the
Company within 10 days of becoming eligible for benefit coverage through another employer or
otherwise, with all medical, dental and vision plan coverage ending as of the last day of the month
as of which the Employee obtains other benefit coverage. Beginning on the date that the Company no
longer provides subsidized benefit coverage pursuant to this section 1(b), the Employee shall be
eligible for health insurance coverage pursuant to the terms of the Consolidated Omnibus Budget
Reconciliation Act of 1985( “COBRA”);
d. Company shall pay Employee his 2008 annual bonus pursuant to Company’s 2008 Short Term
Incentive Plan (“Bonus Plan”) attributable to Employee’s employment with the Company for the period
from January 1, 2008 through Separation Date. The parties agree and acknowledge that the
Employee’s annual bonus target is forty percent (40%) of Employee’s eligible wages from January 1,
2008 through Separation Date. The Employee’s bonus payment will be based on calculations as defined in the Bonus Plan as in
effect on the Separation Date. The Company shall pay the bonus payment to the Employee at the time
in the same form and under the same terms that the Company generally makes payment to the employees
of the Company under the Bonus Plan.
e. Employee will continue to vest in all options to purchase the Company’s common stock, $0.01
par value per share (the “Options”) made to Employee pursuant to the 2005 Stock Compensation Plan
(the “Plan”) through March 31, 2009. The Options shall terminate at 5 p.m. EST on June 30,
2009 (the “Equity Cancellation Date”), except that the Employee remaining an employee of
the Company shall not be a condition to the continued effectiveness of such awards under the Plan
through the Equity Cancellation Date. Any vested, unexercised, Options awarded to Employee under
the Plan and outstanding following the Equity Cancellation Date will no longer be exercisable as of
the Equity Cancellation Date and shall be cancelled and of no further force or effect. In
addition, Employee will continue to vest in all shares of restricted stock and Restricted Stock
Units granted pursuant to the Plan through March 31, 2009; provided, however, that any
performance-based shares or units scheduled to vest during this time period will only vest in
accordance with the performance based criteria as described under the Plan. All Restricted Stock
Units and shares of restricted stock that have not vested as of March 31, 2009 will be cancelled on
that date and of no further force or effect. The Employee will be responsible for any federal,
state and local tax due and owing on the value of the Restricted Stock Units and shares of
restricted stock as of each vesting date.
Employee agrees that, but for his or her execution of this Agreement, he or she would not be
entitled to receive the consideration set forth above.
2. Acknowledgement. Employee acknowledges that he or she has received all
compensation due from Employer, including all vacation pay and other compensation due. Employee
acknowledges that, if applicable, he or she has received proper compensation for any overtime hours
worked. Employee acknowledges that he or she has been granted any leave time to which he or she
believes he or she was entitled under the Family and Medical Leave Act or other laws.
3. Employee’s Release. Employee, on behalf of himself or herself, and on behalf of
his or her descendants, dependents, heirs, executors, administrators, assigns, and successors
hereby generally releases and discharges the Releasees from any and all suits, causes of action,
complaints, obligations, demands, or claims of any kind, whether in law or in equity, direct or
indirect, known or unknown, suspected or unsuspected (hereinafter “claims”), which Employee ever
had or now has against the Releasees, or any one of them, arising out of or relating to any matter,
thing or event occurring up to and including the date of this Severance Agreement and Release.
Employee’s release specifically includes, but is not limited to:
a. any and all claims for wages and benefits including, without limitation, salary, stock,
options, commissions, royalties, license fees, health and welfare benefits, severance pay, vacation
pay, and bonuses;
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b. any and all claims for wrongful discharge, breach of contract (whether express or implied),
or for breach of the implied covenant of good faith and fair dealing;
c. any and all claims for alleged employment discrimination on the basis of age, race, color,
religion, sex, national origin, veteran status, disability and/or handicap, pregnancy, childbirth
or related medical conditions, marital status and any and all other claims in violation of any
federal, state or local statute, ordinance, judicial precedent or executive order, including but
not limited to claims under the following statutes: Title VII of the Civil Rights Act of 1964, 42
U.S.C. §2000e et seq., the Civil Rights Act of 1866, 42 U.S.C. §1981, the Age
Discrimination in Xxxxxxxxxx Xxx, 00 X.X.X. §000 et seq., the Older Workers
Benefit Protection Act, 29 U.S.C. §626(f), the Americans with Disabilities Act, 42 U.S.C. §12101
et seq., the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq., the
Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001 et seq., the Virginia
Human Rights Act, Virginia Code § 2.1-714 et seq., or any comparable statute of any other
state, country, or locality;
d. any and all claims under any federal, state or local statute or law;
e. any and all claims in tort (including but not limited to any claims for misrepresentation,
defamation, interference with contract or prospective economic advantage, intentional or negligent
infliction of emotional distress, duress, loss of consortium, invasion of privacy and negligence);
and
f. any and all claims for attorneys’ fees and costs.
4. Effect of Release. Employee understands that this release extends to all of the
aforementioned claims and potential claims which arose on or before the date of this Severance
Agreement and Release, whether now known or unknown, suspected or unsuspected, and his or her
participation as a member of any class asserting any such claims, and that these constitute
essential terms of this Severance Agreement and Release. Employee further understands and
acknowledges the significance and consequence of this Severance Agreement and Release and of each
specific release and waiver, and expressly consents that this Severance Agreement and Release shall
be given full force and effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected claims, demands, obligations, and causes of
action, if any, as well as those relating to any other claims, demands, obligations or causes of
action herein above-specified. Neither this release nor the promise not to xxx set out below
should be construed, however, to prevent Employee from filing a claim based on rights that cannot
be waived as a matter of law, such as, but not limited to, claims for vested benefits under ERISA.
5. Covenant Not to Xxx. Employee affirms that no charge, complaint or action exists
in any forum brought by or on behalf of Employee against the Releasees and that Employee has not
assigned any existing or potential claim that Employee purports to release to any third party.
Further, Employee, on behalf of himself or herself, and his or her descendants, dependents, heirs,
executors, administrators, assigns, and successors covenants that Employee will not at any time
hereafter commence, maintain, or in any way cause, or advise to be
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commenced or prosecuted, or permit to be filed by any other person on her behalf, any
grievance, charge, action (including any class action), suit, or proceeding (judicial or
administrative) against Employer, except as such waiver is specifically prohibited by law or
regulation. Although this Agreement does not prevent Employee from filing a charge with the Equal
Employment Opportunity Commission (or similar state agency) or participating in an investigation
conducted by the Commission (or similar state agency), any claims for personal relief, including
reinstatement or monetary damages, would be barred.
6. Remedies. All remedies at law or in equity shall be available to the Releasees for
the enforcement of this Severance Agreement and Release. This Severance Agreement and Release may
be pleaded as a full bar to the enforcement of any claim that Employee may assert against the
Releasees.
7. No Admissions. Neither the execution of this Severance Agreement and Release by
the Releasees, nor the terms hereof, constitute an admission by the Releasees of liability to
Employee.
8. No Disparagement. Employee agrees to refrain from making disparaging comments
about the Releasees, and further agrees not to disrupt the Releasees’ business activities in any
manner whatsoever
9. Confidentiality. Employee shall not disclose or publicize the terms or fact of
this Severance Agreement and Release, directly or indirectly, to any person or entity, except to
his or her accountant, attorney, spouse, and to others as required by law.
10. Cooperation. Employee agrees to cooperate fully and promptly with any inquiries
he gets from the Company, its Board of Directors, or any committee thereof pertaining to any and
all matters relating to the management, operations, and/or financial affairs of the Company. Such
cooperation shall include truthful interviews as requested by the Company and the providing of all
requested documents, electronic data and/or other information.
11. Confidentiality; Non-Solicitation. In consideration for the consideration which
Employee has or will receive from the Company under this Agreement, Employee agrees to be bound by
the Restrictive Covenants set forth below.
a. Definitions. Capitalized terms used herein will have the meanings set forth in the
preamble of this Agreement, or as set forth below:
(1) “Proprietary Information” means confidential, proprietary, business and technical
information or trade secrets of the Company or of any parent, subsidiary or affiliate of the
Company which are not generally known or accessible to the public. Such Proprietary Information
shall include, but shall not be limited to, the following items and information relating to the
following items: (a) computer codes or instructions (including source and object code listings,
program logic algorithms, subroutines, modules or other subparts of computer programs and related
documentation, including program notation), computer processing systems and techniques, all
computer inputs and outputs (regardless of the media on which stored or located), hardware and
software configurations, designs, architecture and interfaces, (b) business research, studies,
procedures and costs, (c) financial data, (d) policy
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information, (e) sales and marketing data, methods, plans and efforts, and market research
information, (f) the identities of the Company’s actual and prospective customers (including
identifying information such as name, address and telephone number), contractors and suppliers, (g)
the terms of contracts and agreements with customers, contractors and suppliers, (h) the needs and
requirements of, and the Company’s course of dealing with, actual or prospective customers,
contractors and suppliers, (i) personnel information, and (j) pricing information. Failure by the
Company to xxxx any of the Proprietary Information as confidential or proprietary shall not affect
its status as Proprietary Information under the terms of this Agreement.
(2) “Restricted Period” means the nine month period following the Employee’s
Separation Date.
(3) “Restrictive Covenants” means the provisions contained in Section 11 of this
Agreement.
b. Non-Solicitation. Employee shall not, during the Restricted Period, influence or
attempt to influence any person to either (1) terminate or modify any employment, consulting,
director, agency or other arrangement with the Company, or (2) employ or retain, or arrange to have
any other person or entity employ or retain, any person who has been employed or retained by the
Company as an Employee, consultant, agent or director of the Company at any time during the
Restricted Period.
c. Confidentiality. Employee recognizes and acknowledges that the Proprietary
Information is a valuable, special and unique asset of the business of the Company. As a result,
both during the period of Employee’s employment and thereafter, Employee shall not, without the
prior written consent of the Company, for any reason either directly or indirectly divulge to any
third party or use for his own benefit, or for any purpose other than the exclusive benefit of the
Company, any Proprietary Information revealed, obtained or developed in the course of his
employment by the Company, except as may be required by law. If Employee or any of his or her
representatives become legally compelled to disclose any of the Proprietary Information, Employee
will provide the Company with prompt written notice so that the Company may seek a protective order
or other appropriate remedy. Employee also recognizes that Employee continues to be bound by the
Company’s Code of Conduct and its provisions concerning confidentiality.
d. Property. All right, title and interest in and to Proprietary Information shall be
and remain the sole and exclusive property of the Company. Employee shall not make, retain,
remove, disclose and/or distribute any copies of any documents, records, notebooks, files,
correspondence, reports, memoranda or similar materials of or containing Proprietary Information,
or other materials or property of any kind belonging to the Company for any reason whatsoever and
shall not divulge to any third person the nature of and/or contents of any of the foregoing or of
any other oral or written information to which he may have had access or with which for any reason
he may have become familiar. Upon the termination of his or her employment with the Company,
Employee shall leave with or return to the Company all originals and copies of the foregoing then
in his possession, whether prepared by Employee or by others.
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12. Rights and Remedies Upon Breach.
a. Specific Enforcement. Employee acknowledges that the Restrictive Covenants are
reasonable and necessary to protect the legitimate interests of the Company and its affiliates and
that the Company would not have entered into this Agreement in the absence of such restrictions.
Employee also acknowledges that any breach by him or her, willfully or otherwise, of the
Restrictive Covenants will cause continuing and irreparable injury to the Company for which
monetary damages would not be an adequate remedy. Employee shall not, in any action or proceeding
to enforce any of the provisions of this Agreement, assert the claim or defense that such an
adequate remedy at law exists. In the event of any such breach by Employee, the Company shall have
the right to enforce the Restrictive Covenants by seeking injunctive or other relief in any court,
without any requirement that a bond or other security be posted, and this Agreement shall not in
any way limit remedies of law or in equity otherwise available to the Company. If an action at law
or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to recover, in addition to any other relief, reasonable attorneys’ fees, costs
and disbursements.
b. Accounting. If Employee willfully breaches, or threatens to commit a breach of any
of the Restrictive Covenants, the Company will have the right and remedy to require Employee to
account for and pay over to the Company all compensation, profits, monies, accruals, increments or
other benefits derived or received by Employee as the result of any action constituting a breach of
the Restrictive Covenants. This right and remedy will be in addition to, and not in lieu of, any
other rights and remedies available to the Company under law or in equity.
c. Judicial Modification. If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or scope of such
provision, such court shall have the power to modify such provision and, in its modified form, such
provision shall then be enforceable.
13. Disclosure of Restrictive Covenants. Employee agrees to disclose the existence
and terms of the restrictive covenants set forth in Section 11 to any employer that Employee may
work for during the Restricted Period. Employee further agrees that the Company has the right to
make such disclosure to any future employer of Employee or for any other legitimate business
purpose.
14. Enforceability. If any court holds the Restrictive Covenants unenforceable by
reason of their breadth or scope or otherwise, it is the intention of the parties hereto that such
determination not bar or in any way affect the right of the Company to the relief provided above in
the courts of any other jurisdiction within the geographical scope of such Restrictive Covenants.
15. Essential Terms. Employee understands and acknowledges that the promises in
paragraphs 5, 8, 9, 10 and 11 are a material inducement for Releasees to enter this Agreement and
are of the essence of this Agreement. Employee therefore agrees that if he or she should breach
any of the provisions of the aforementioned paragraphs, it will be a material breach of the
Agreement, entitling Employer (in addition to any other remedies available) to stop making severance payments (if any are still outstanding), to costs and fees for enforcement of the
breached provision(s), and to the return of any payments made to Employee under this Severance
Agreement and Release, except that Employee may retain (or be paid) $1,000 as consideration for the
release. This Severance Agreement and Release will in all other respects remain in full force and
effect.
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16. Advice of Counsel; Revocation Period. Employee is hereby advised to seek the
advice of counsel. Employee acknowledges that he is acting of his own free will, that he has been
afforded a reasonable time to read and review the terms of the Severance Agreement and Release, and
that he is voluntarily entering into this Severance Agreement and Release with full knowledge of
its provisions and effects. Employee intends that this Severance Agreement and Release shall not
be subject to any claim for duress.
17. Fees and Costs. The parties shall bear their own attorneys’ fees and
costs.
18. Entire Agreement. This Severance Agreement and Release contains the entire
agreement of the parties with respect to the subject matter hereof, supersedes any prior agreements
or understandings with respect to the subject matter hereof, and shall be binding upon their
respective heirs, executors, administrators, successors and assigns.
19. Severability. If any term or provision of this Agreement shall be held to be
invalid or unenforceable for any reason, the validity or enforceability of the remaining terms or
provisions shall not be affected, and such term or provision shall be deemed modified to the extent
necessary to make it enforceable.
20. Amendments. Neither this Severance Agreement and Release nor any term hereof may
be orally changed, waived, discharged, or terminated, and may be amended only by a written
agreement between the parties hereto.
21. Governing Law. This Severance Agreement and Release shall be governed by the laws
of the Commonwealth of Virginia, without regard to the conflict of law principles of any
jurisdiction.
22. Legally Binding. The terms of this Severance Agreement and Release contained
herein are contractual, and not a mere recital.
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IN WITNESS WHEREOF, the parties, acknowledging that they are acting of their own free will,
have caused the execution of this Severance Agreement and Release as of this day and year first
written below.
| / s / Xxxxxxxx Xxxxxxx | ||||
| Xxxxxxxx Xxxxxxx | ||||
Date:
|
November 4, 2008 | |||
By:
|
RCN TELECOM SERVICES, INC. | |||
| / s / Xxxxxxxx XxXxxxx | ||||
Name:
|
Xxxxxxxx XxXxxxx | |||
Title:
|
Vice President, Human Resources | |||
Date:
|
November 4, 2008 | |||
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