Exhibit 10.3
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SEVERANCE AGREEMENT AND MUTUAL GENERAL RELEASE
This Severance Agreement and Mutual General Release (hereinafter
"Agreement") is entered into as of the 12th day of September, 2002, by and
between Xxxxxxx X. Xxxxx ("Xxxxx"), C5 Technologies, Inc., a Nevada corporation,
and ePenzio, Inc., a Utah corporation (collectively, "C5"), and who shall
collectively be referred to as the "Parties", and individually as a "Party."
RECITALS
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WHEREAS, effective June 1, 2001, Network Investor Communications, Inc.
(which later had its name changed to C5) and Xxxxx entered in an employment
agreement, as amended, (the "Employment Agreement");
WHEREAS, the Parties mutually agree that it is in their respective best
interests to bring the employment relationship between Xxxxx and C5 to a
conclusion and resolve any disputes between them; and
WHEREAS, the Parties desire to resolve, settle and compromise any and
all claims between the Parties.
COVENANTS
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NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties covenant and agree as
follows:
1. Termination of Employment. Effective August 31, 2002, the Parties
mutually agree that Xxxxx' employment with C5 ceased. Furthermore, upon the
execution of this Agreement, Xxxxx shall deliver to Xxxxx & Xxxxxx, LLP, counsel
for C5, a written resignation from his positions as Chairman of the Board of
Directors and Chief Executive Officer of C5 and as an officer or director of C5
and any of C5's subsidiaries, in the form attached hereto as Exhibit A, with
such resignation to be immediately effective.
2. Severance Compensation. C5 shall provide the following to Xxxxx as
xxxxxxxxx compensation:
(a) pay Xxxxx the additional sum of $167,500 as follows: (i)
$10,000 upon execution of this agreement, (ii) $10,000 on 9/20/02 and
(iii) then seven regular and successive monthly payments of $21,071.43
each payable on the 15th of each month starting on October 15, 2002.
These payments shall be paid, less applicable tax withholdings, as
severance pay and as consideration for C5 entering into this Agreement.
(b) pay monthly on the 20th of each month all other benefits to
which Xxxxx is entitled pursuant to ss. 6(d) of his Employment
Agreement through April 30, 2003, including, but not limited to the car
allowance in the amount of $800 per month, car insurance as currently
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being provided and the other benefits specified in ss. 6(d) of the
Employment Agreement. Upon execution of this Agreement, C5 shall
deliver to Xxxxx a check in the amount of $5,142 as reimbursement for
his car allowance, and car and life insurance through August 31, 2002.
(c) in the event that C5 fails to timely pay any amounts owing
pursuant to this Section 2, all amounts owing under this Agreement
shall be accelerated, and shall be immediately due and payable, without
further notice, except that with regard to an initial failure (one) to
timely pay, C5 shall be allowed a fifteen day grace period without
acceleration of all amounts owing.
3. Health Insurance. C5 agrees to provide through April 30, 2003, a
continuation of Xxxxx' health insurance, as currently in place, and provide to
him thereafter the availability of COBRA continuation coverage at his expense.
4. Full Vesting of Options.
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(a) C5 and Xxxxx agree that as of the date hereof, options to
purchase all of Xxxxx initial 200,000 share option grant have fully
vested, and that options to purchase all of Xxxxx' 500,000 share option
have fully vested. The strike price for both of these options is $0.25
per share. As of the date hereof, Xxxxx has not been granted any other
options.
(b) Xxxxx and C5 agree that except as set forth in Section 4 (a)
above, Xxxxx does not own any additional options, nor is he entitled to
receive any additional shares from C5. All options which have vested as
set forth in Section 4 (a) above, shall be exercisable in accordance
with the terms set forth in the relevant option agreement(s) and
grant(s).
(c) In connection with the anticipated transaction with MindArrow
Systems, Inc. ("MindArrow") transaction, it is anticipated that
executives of C5 will be required to sign a lock-up agreement. Xxxxx
agrees that, subject to Xxxxx being free to sell shares within the
volume limitations found in Rule 144, and provided that a merger or
similar agreement is executed by C5 with MindArrow within 30 days of
the date hereof, Xxxxx will execute a lock-up agreement for the shorter
of 6 months from the date hereof, or the same duration as other C5
executives.
5. Cooperation to be Provided by Xxxxx. Xxxxx agrees that, in the event
that he is asked by the Chief Executive Officer of either C5 or MindArrow, or
any of their successor entities, he will (i) answer questions and provide
limited assistance with respect to matters he was involved with while employed
by C5, and (ii) cooperate fully to complete the anticipated merger transaction
with MindArrow. In the event of any such request(s), C5 shall reimburse Xxxxx
for any pre-approved out-of-pocket expenses incurred by Xxxxx in connection with
providing said cooperation or services. In the event investors, customers,
lenders, prospective customers, employees or others specifically ask for Xxxxx
input or opinion regarding C5 and its affiliated or successor entities, Xxxxx
agrees to provide truthful and positive communications regarding C5, its
affiliated or successor entities, its officers, directors, employees and
products.
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6. Crescent Advisors Shares. Upon execution of this Agreement, Xxxxx
shall deliver to Xxxx Xxxxxxxx, on behalf of C5, the share certificate
representing 900,000 shares of Company stock that had been issued to Crescent
Advisors, LLC pursuant to two letter agreements dated February 22, 2001 and May
29, 2001. Xxxxx hereby waives any claim or interest that Xxxxx may have had in
said shares.
7. Release by Xxxxx.
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(a) Except for the exclusions specifically set forth below in
subparagraph 7(b), Xxxxx hereby irrevocably and unconditionally
releases and discharges, for himself and for his heirs, executors, and
assigns, any and all claims or causes of action of any nature
whatsoever, whether known or unknown, against C5, its subsidiaries, and
their present or former employees, agents, officers, directors,
trustees, successors, predecessors, and assigns, which Xxxxx has or had
against any of them as of the date hereof relating in any way to (i)
his employment with C5, (ii) the business and affairs of C5 and its
subsidiaries, (iii) any transaction involving C5, and (iv) the original
acquisition by C5 (Network Investors Communications, Inc.) of ePenzio,
Inc. This release includes, without limitation, any claims, demands, or
causes of action arising out of, or relating in any manner whatsoever
to Title VII of the Civil Rights Act of 1964 and 1991, as amended, the
Labor Management Relations Act, the Employee Retirement Income Security
Act of 1974 (ERISA), the Fair Labor Standards Act (FLSA), the Utah
Anti-Discrimination Act of 1965, as amended, the Older Worker's Benefit
Protection Act, Worker's Compensation claims, the Americans with
Disabilities Act (ADA), as amended, or any other applicable federal,
state, or local statute or regulation, or any common law cause of
action, including without limitation, claims for breach of any express
or implied contract, the covenant of good faith and fair dealing, tort,
wrongful discharge, constructive discharge, personal injury, emotional
distress, defamation, fraud, or any claims for attorneys' fees or other
costs.
Xxxxx acknowledges that he has no claim under any federal, state
or local age discrimination in employment law including, but not
necessary limited to, the Age Discrimination in Employment Act (ADEA),
the Utah Anti-Discrimination Act (UADA), and WAIVES any claim under the
ADEA or UADA for any alleged event or incident occurring up to the time
of the execution of this Agreement.
Xxxxx further covenants and agrees that, except for those items
expressly set forth herein, upon being paid the amounts provided for in
Sections 2 and 3, above, C5 is not further indebted to him in any
amount for any reason, including any fringe benefits or other forms of
compensation.
(b) Xxxxx expressly reserves and excludes from the Release set
forth in paragraph 7(a) the following:
(i) any claim or cause of action relating to a breach of
this Agreement or the enforcement of any of its terms.
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(ii) any claim, right or cause of action against Xxxx
Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxxxx Xxxxxx, and Xxxx
Xxxxxxxxxx. Xxxxx agrees to execute a release of the same
scope granted by Xxxxx in paragraph 7(a) above in favor of
each such named individual concurrently with such a named
individual executing a release in favor of Xxxxx of the
same scope.
(c) Xxxxx represents and warrants that he has not assigned or
subrogated any of his rights, claims and causes of action (including
any claims referenced in this Agreement) against C5 or authorized any
other person or entity to assert such claim or claims on his behalf and
he agrees to indemnify and hold harmless C5 against any assignment of
said right, claims and/or causes of action.
(d) Xxxxx acknowledges that he has been given at least twenty-one
(21) days within which to consider this Agreement before execution
(which twenty-one day period he hereby waives) and seven (7) days
following the execution of the Agreement to revoke it. This Agreement
shall not become effective or enforceable until the foregoing
revocation period has elapsed. Xxxxx' decision not to revoke this
Agreement shall be reflected by signature(s) on Exhibit B, which is
incorporated herein and made part hereof.
8. Release by C5.
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(a) Except for any claim or cause of action relating to a breach
of this Agreement or enforcement of its terms, C5 hereby irrevocably
and unconditionally releases and discharges, for itself and for its
subsidiaries, and their successors, predecessors and assigns, from any
and all claims or causes of action of any nature whatsoever, whether
known or unknown, against Xxxxx, his heirs, executors and assigns,
which C5 has or had against any of them as of the date hereof,
including those relating in any way to (i) his employment with C5, (ii)
the business and affairs of C5 and its subsidiaries, (iii) any
transaction involving C5 or its subsidiaries, and (iv) the original
acquisition by C5 (at that time, Network Investors Communications,
Inc.) of ePenzio, Inc. This release includes, without limitation, any
claims, demands, or causes of action arising out of, or relating in any
manner whatsoever to Title VII of the Civil Rights Act of 1964 and
1991, as amended, the Labor Management Relations Act, the Employee
Retirement Income Security Act of 1974 (ERISA), the Fair Labor
Standards Act (FLSA), the Utah Anti-Discrimination Act of 1965, as
amended, the Older Worker's Benefit Protection Act, Worker's
Compensation claims, the Americans with Disabilities Act (ADA), as
amended, or any other applicable federal, state, or local statute or
regulation, or any common law cause of action, including without
limitation, claims for breach of any express or implied contract, the
covenant of good faith and fair dealing, tort, wrongful discharge,
constructive discharge, personal injury, emotional distress,
defamation, fraud, or any claims for attorneys' fees or other costs.
(b) C5 represents and warrants that it has not assigned or
subrogated any of its rights, claims and causes of action (including
claims referenced in this Agreement) against Xxxxx or authorized any
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other person or entity to assert such claim or claims on its behalf,
and C5 agrees to indemnify and hold harmless Xxxxx against any
assignment of said right, claims and/or causes of action.
(c) C5 represents and warrants that it has full power and
authority, and has been duly authorized to enter into this Agreement
and the release contained herein.
9. Representations.
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(a) Xxxxx specifically represents that he has not filed any
complaints or charges against C5 with any local, state or federal court
or agency, including without limitation, any claims arising out of, or
relating in any manner whatsoever to, the employment of Xxxxx by C5 and
his separation from C5.
(b) C5 specifically represents that it has not filed any
complaints or charges against Xxxxx with any local, state or federal
court or agency, including, without limitation, any claims arising out
of, or relating in any manner whatsoever to Xxxxx' employment with C5,
any action or inaction by Xxxxx while employed by C5, or any action or
inaction by Xxxxx relating to the acquisition by C5 of ePenzio, Inc.
10. Mutual Nondisclosure and Confidentiality. The Parties shall
mutually agree to a press release announcing Xxxxx' resignation from C5. The
Parties further agree that unless required by law or compelled or allowed
otherwise by court order or subpoena, the terms and conditions of this
Agreement, including but not limited to the severance payments referenced in
Sections 2 and 3 above, shall remain confidential and will not be disclosed or
released to any other person(s) or third parties except for Xxxxx' immediate
family members and the Parties' attorney(s), advisors and accountant(s) provided
that they agree to the same nondisclosure terms and conditions.
11. Mutual Non-Disparagement. Xxxxx shall at all times hereafter
refrain from any activity harmful to or making any disparaging or negative
statements concerning C5, its affiliates, subsidiaries, officers, boards of
directors, employees, successors or assigns, either publicly or privately. C5,
its officers and Directors shall at all times hereafter refrain from any
activity harmful to or making any disparaging or negative statements concerning
Xxxxx, either publicly or privately. In the event of inquiry of C5 regarding Xx.
Xxxxx' employment, it is agreed that all such inquiries shall be referred to
either Xx. Xxxxxx Xxxxxx or Xx. Xxxxxx Xxxxxxx who shall be designated as C5's
representatives to handle such inquiries. No other officer, director, or
employee shall respond to the inquiry.
12. Non-Disclosure of Proprietary Information; Assignment of
Inventions; Shop Rights; Non-Compete and other Surviving Provisions of Xxxxx'
Employment Agreement. Xxxxx acknowledges that Sections 15, 16, 17, 18, 19 and 20
of his Employment Agreement dated June 1, 2001 survive and remain in full force
and effect. These provisions relate to Non-Disclosure of Proprietary
Information; Assignment of Inventions; Shop Rights; Non-Compete; Remedies and
Jurisdiction; and Attorney's Fees. Xxxxx specifically ratifies and agrees to
abide by the terms of these provisions and acknowledges their enforceability,
and C5 ratifies and agrees that the same provisions are binding upon it and
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acknowledges their enforceability, except the parties agree that not
withstanding any provision of Xxxxx' employment agreement with C5 to the
contrary, Xxxxx shall not be prohibited from and shall have the right to
represent and act for any person or entity as a lawyer or investment banker.
13. Termination of Xxxxx' Employment Agreement. Except as set forth in
Section 12 hereof, Xxxxx' Employment Agreement with C5 (previously Network
Investor Communications, Inc.) shall be deemed to have terminated and of no
further force or effect effective August 31, 2002.
14. Best Efforts Regarding Certain Other Shareholders. If Peruvian LLC,
Jupiter Holdings, LLC, or King's Peak Capital, LLC are requested as part of the
MindArrow transaction, to execute lock-up agreements of the same duration as the
executives of C5, Xxxxx will use his reasonable best efforts to encourage such
shareholders to execute such agreements. C5 understands that Xxxxx sole
obligation under this Section 15 is to use his reasonable best efforts to
encourage this activity and that there is no guaranty of success in any or all
of these efforts by Xxxxx.
15. Reimbursement of Legal Fees.
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(a) Upon execution of this Agreement and upon receipt by Xxxx
Xxxxxxxx of an invoice reflecting hours worked on behalf of Xxxxx, C5
will promptly pay to the law firm of Berman, Gaufin, Xxxxxx & Savage
legal fees incurred by Xxxxx in connection with the preparation and
negotiation of this Agreement at Xxx Xxxxxx'x normal hourly rate up to
a cap of $15,000.
(b) C5 shall advance as incurred, within fifteen days of receipt
of any statement therefore, any and all attorneys fees, at the
attorneys' normal hourly rates, as provided and limited in paragraph
15(c) below, and costs incurred by Xxxxx in defending any claim or
cause of action by any person or entity that relate in any way to the
employment of Xxxxx with C5, the business and affairs of C5 and its
subsidiaries, any transaction between C5 and any other entity or
person, or to the original acquisition by C5 of ePenzio, Inc.
(c) C5 shall advance the first $200,000 in attorney fees as
provided in paragraph 15(b) above and 50% of all legal fees over
$200,000 as provided in paragraph 15(b) above up to a total cap on
legal fees due from C5 of $350,000.
(d) C5 shall indemnify and hold Xxxxx harmless from any claim,
cause of action or judgment brought against Xxxxx by any C5 officer,
director or employee, except for a final judgement against Xxxxx for
actual fraud or a scheme to defraud in violation of ss.10(b)(5) of the
Securities Exchange Act of 1934 or ss.61-1-1 UCA on the part of Xxxxx.
If, at the conclusion of any action, there is a final judgment for
actual fraud or a scheme to defraud in violation of ss.10(b)(5) of the
Securities Exchange Act of 1934 or ss.61-1-1 UCA on the part of Xxxxx
which results in liability by Xxxxx to the party bringing the action in
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excess of $35,000, whether through damages or equitable relief, Xxxxx
shall repay to C5 the amount of legal fees advanced to him pursuant to
paragraph (b) above.
16. Voluntary Agreement. This Agreement is freely entered into by the
undersigned.
17. Agreement Not an Admission. The Parties hereby acknowledge that
neither this Agreement nor the settlement payment made hereunder nor the
acceptance of the same may be treated as an admission of any legal
responsibility, liability, wrongdoing or fault of any kind whatsoever. Such
responsibility, liability, wrongdoing and fault being expressly denied.
18. Entire Agreement. Except for certain Sections of the Employment
Agreement which survive this Agreement, which Sections are identified in Section
13 hereof, this Agreement constitutes the sole and entire agreement between the
Parties, and supersedes any and all understandings and agreements made prior
hereto. There are no collateral understandings, representations, or agreements
other than those contained herein. It is understood and agreed that the
execution of this Agreement by either Xxxxx or C5 is not an admission of
liability, but is a severance agreement to put to rest any claim of any kind
whatsoever between the Parties, which either Party may have against the other up
to the date of execution of this Agreement.
19. Jurisdiction. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance, or otherwise, by
the laws of the State of Utah, and no action involving this Agreement may be
brought except in the Courts of the State of Utah or the Federal District Court
for the District of Utah. If any provision of this Agreement is held to be
invalid, void or unenforceable for whatever reason, the remaining provisions not
so declared shall nevertheless continue in full force and effect without being
impaired in any manner whatsoever.
20. Attorneys Fees. In the event that either party hereunder institutes
any legal proceedings in connection with its rights or obligations under this
Agreement, the prevailing party shall be entitled to recover from the other
party, all costs incurred in connection with such proceeding, including
reasonable attorneys fees, and in addition shall be entitled to recover interest
of 8% per annum on any amounts due and not paid on a timely basis.
21. Breach. In addition to other remedies that may be available to
either Party, each Party shall be entitled to specific performance and
injunctive relief as remedies for any breach or threatened breach of this
Agreement by the other Party. Each Party agrees that in the event of any breach
of any provision of this Agreement, the Party who is found to have breached this
Agreement will indemnify and hold harmless the other Party from and against any
and all claims, demands, causes of action, obligations, damages or liabilities
including costs and attorneys fees arising from or in connection with that
breach.
22. Waiver. No waiver by any Party of any breach of any term or
provision of this Agreement shall be construed to be a waiver of any proceeding,
concurrent or succeeding breach of the same or any other term or provision
hereof. No waiver shall be binding on the part of or on behalf of any Party
entering into this Agreement.
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23. Understanding. The Parties represent and agree that they have
carefully read and fully understand all the provisions of this Agreement.
24. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one agreement.
25. Amendments and Modifications. Any amendment or modification of this
Agreement must be in writing and signed by each Party.
THE SIGNATORIES HAVE CAREFULLY READ THIS ENTIRE
AGREEMENT. THE SIGNATORIES FULLY UNDERSTAND
THE FINAL AND BINDING EFFECT OF THIS AGREEMENT.
THE ONLY PROMISES MADE TO ANY SIGNATORY TO SIGN
THIS AGREEMENT ARE CONTAINED IN THIS AGREEMENT.
THE SIGNATORIES ARE SIGNING THIS AGREEMENT
VOLUNTARILY. PLEASE READ CAREFULLY: THIS
SEVERANCE AGREEMENT AND GENERAL RELEASE
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS.
IN WITNESS WHEREOF, this Severance Agreement and General Release is
executed as of the date first above written.
CATEGORY 5 TECHNOLOGIES, INC. XXXXXXX X. XXXXX
By ______________________________________ __________________________
Xxxx Xxxxxxxx, Chief Executive Officer Xxxxxxx X. Xxxxx
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EXHIBIT A
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RESIGNATION OF XXXXXXX X. XXXXX
I, Xxxxxxx X. Xxxxx, hereby resign my employment with Category 5
Technologies, Inc. ("C5"), including, without limitation, my position as
Chairman of the Board of Directors, Chief Executive Officer and Director as of
August 31, 2002.
I also hereby confirm my Resignation from (a) any other capacity that I
held, including any committee, as of the same date and (b) any subsidiary of C5
as a director, officer, and from any other capacity that I held as of the same
date. A copy of this Resignation shall be deemed an original.
__________________________ Date: September 12, 2002
Xxxxxxx X. Xxxxx
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EXHIBIT B
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NON-REVOCATION
AS OF THE DATE SHOWN ON THIS FORM
By signing below, I hereby verify that I have chosen not to revoke my
agreement to and execution of the Severance Agreement and General Release. My
signature confirms my renewed agreement to the terms of that Agreement,
including the release and waiver of any and all claims relating to my employment
with C5 and its successors, assigns, and affiliated entities, and/or the
termination of that employment.
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Xxxxxxx X. Xxxxx (Social Security Number)
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Signature* Date*
*Do not sign, date, or return this document until eight (8) days after
you sign the Severance Agreement and General Release
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