SEPARATION AND RELEASE AGREEMENT
EXHIBIT
10.1
This
Separation and Release Agreement is entered into this 4th of August, 2006 by
and
between RCN Corporation, a Delaware corporation (together with its Affiliates,
the “Company”),
and
Xxxxxxx Xxxxx Xxxxx (the “Executive”).
The
parties may individually be referred to herein as a “Party” and collectively as
the “Parties.”
WHEREAS,
the Company has determined to restructure its management of certain functions,
including the elimination of the position currently occupied by Executive;
and
WHEREAS,
the Parties desire to effect the separation of Executive from the Company in
a
manner consistent with such management reorganization and on the terms and
conditions set forth more fully herein.
NOW,
THEREFORE, in consideration of the foregoing, of the mutual promises herein
contained, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto, intending
legally to be bound, hereby agree as follow.
1.
Separation
Date.
The
Executive’s employment with the Company shall terminate effective as of July 7,
2006 (the “Separation
Date”).
2.
Separation
Payments and Benefits.
As
consideration for the Executive’s execution of this Agreement and the
Executive’s compliance with the terms, conditions, and obligations set forth
herein, the Company shall provide Executive with the benefits set forth
below.
(a) Severance.
At the
next date for payment of regular payroll to the Company’s employees following
the execution date hereof and the expiration of any applicable period for
revocation under Section 6(k) (the “Payment
Date”),
the
Company shall make a one-time, lump sum cash payment to Executive (the
“Severance
Payment”)
in the
gross amount of $225,000.00, which will be subject to customary withholding
for
Federal, state and local taxes (an amount equal to one year of Executive’s base
salary as of the date of this Agreement), subject to further reduction pursuant
to Section 2(c).
(b) Prorated
Bonus.
In
addition to the Severance Payment, the Company shall pay to Executive the
prorated portion of annual bonus pursuant to the Company’s 2006 Short Term
Incentive Plan (the “Bonus
Plan”)
attributable to Executive’s employment with the Company for the period from
January 1, 2006 through the Separation Date (the “Bonus
Payment”).
The
parties agree and acknowledge that Executive’s target annual bonus under the
Bonus Plan attributable to fiscal 2006 was 40% of Executive’s base salary. The
Bonus Payment shall be paid by the Company to the Executive at the time that
the
Company generally makes payments to the employees of the Company under the
Bonus
Plan.
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(c) Continuation
of Benefits.
The
Company will continue the Executive’s participation in all medical, dental, and
vision benefit plans in which Executive is enrolled as of the Separation Date
for a period ending on July 31, 2007 (the “Benefits
Expiration Date”).
In
addition, the Company will permit Executive to continue participation in any
Company life insurance program in which Executive participates as of the
Separation Date through the Benefits Expiration Date. All benefits provided
to
Executive under this Section 2(c) shall be on the same terms and conditions
as
if Executive were still employed by the Company, except that Executive’s
continued employment by the Company shall not be a condition to receiving such
benefits. Executive’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. Notwithstanding the foregoing, the rights to receive
any and all benefits under this Section 2(c) shall immediately terminate upon
the Executive becoming eligible for medical benefits in connection with
full-time employment after the Separation Date, and no amounts deducted from
the
Severance Payment in respect of this Section 2(c) shall be payable to Executive
at such time.
(d) Equity
Compensation.
All
vested options to purchase the Company’s common stock, $0.01 par value per share
(the “Options”)
made
to Executive pursuant to the 2005 Stock Compensation Plan (the “Plan”)
shall
remain outstanding under their current terms and conditions through December
31,
2006 (the “Options
Cancellation Date”),
except that the Executive remaining an employee of the Company shall not be
a
condition to the continued effectiveness of such awards under the Plan through
the Options Cancellation Date; provided,
however,
that
any unvested Options granted to Executive under the Plan shall immediately
be
cancelled on the Separation Date, and be of no further force and effect. Any
vested, unexercised, Options awarded to Executive under the Plan and outstanding
following the Options Cancellation Date will no longer be exercisable as of
the
Options Cancellation Date and shall be cancelled and of no further force or
effect. The Executive shall retain his rights to any unvested shares of
restricted stock held in escrow for future issuance to Executive pursuant to
(i)
that certain Restricted Stock Agreement, dated as of March 25, 2005, by and
between the Company and Executive, and (ii) that certain Restricted Stock
Agreement, dated as of November 28, 2005, by and between the Company and
Executive, in each case until March 31, 2007 (the “Equity
Cancellation Date”),
following which such unvested shares of restricted stock shall be immediately
forfeited effective as of the Equity Cancellation Date and be of no further
force and effect. Executive shall not be entitled to any future issuance of
shares of restricted Common Stock under any agreements, plans, or understandings
among the Parties. Notwithstanding the foregoing, Executive shall not exercise
any stock options nor trade any shares of the Company’s Common Stock until
August 12, 2006.
(e) Accrued
Benefits.
The
Company shall pay Executive in cash the value of any accrued and unused vacation
time, commissions, and business expenses.
2
3.
Release
and Waiver.
(a) Executive,
of Executive’s own free will, hereby voluntarily waives, releases and forever
discharges the Company and its Affiliates, and their directors, members,
managers, officers, employees and agents (the “Released
Parties”)
of and
from any and all actions or causes of action, suits, grievances, claims, debts,
charges, complaints, contracts (whether oral or written, express or implied,
from any source, other than this Agreement), claims for recall or reinstatement
and promises, whatsoever, in law or equity, which Executive, or Executive’s
heirs, executors, administrators, successors and assigns, may have, or may
have
knowledge of or may be charged with knowledge of, as of the date of this
Agreement for, upon, or by reason of any matter, cause or thing whatsoever
including, but not limited to, any and all matters arising out of Executive’s
employment by the Company, the termination of said employment, or any of the
rights, duties, obligations or liabilities, if any, of the Parties under (i)
that certain employment letter, dated January 6, 2005, (ii) that certain
Restricted Stock Agreement, dated as of March 25, 2005, by and between the
Company and Executive, and (iii) that certain Restricted Stock Agreement, dated
as of November 28, 2005, by and between the Company and Executive, in each
case
between the Company to the Executive, and including, but not limited to, any
violation of (i) the following Federal statutes, as amended: Title VII of the
Civil Rights Act of 1964; Sections 1981 through 1988 of Title 42 of the United
States Code; the Employee Retirement Income Security Act of 1974; the Vocational
Rehabilitation Act of 1973; the Age Discrimination in Employment Act of 1967;
the Older Workers Benefit Protection Act of 1990; the Family and Medical Leave
Act; the WARN Act; and the Americans with Disabilities Act of 1990, (ii) the
following state statutes, as applicable: the Pennsylvania Human Relations Act,
43 P.S. §§951, et seq.; the New Jersey Conscientious Employee Protection Act,
N.J.S.A. 34:1-1, et seq.; the New Jersey Law Against Discrimination, N.J.S.A.
10:5-1, et seq.; the California Fair Employment and Housing Act, Cal. Govt.
Code
§§12940, et seq.; Article 49B of the Annotated Code of Maryland, Massachusetts
Fair Employment Practices Act, G.L.C. 151B; New York Human Rights Law, N.Y.
Exec. Law §§291, et seq.; D.C. Human Rights Act, D.C. Code §§1-2500, et seq.;
Virginia Human Rights Act, Va. Code §§2.1-715, et seq.; Illinois Human Rights
Act, Ill. Stat. Ch. 775, §§1-101-9-102, (iii) any other Federal, state or local
labor, whistleblower, wage and hour or human rights law, and (iv) any other
alleged violation of any local, state or Federal law, regulation or ordinance
and/or public policy, contract, tort or common law having any bearing whatsoever
on the terms and conditions and/or cessation of Executive’s employment with the
Company that Executive ever had, now has or may have as of the date of execution
of this Agreement.
(b) Executive
understands and agrees that this Agreement affects a general release, including
with respect to claims, if any, that Executive may have against Company and
that
the Executive is unaware of as of the date of this Agreement. Executive hereby
waives all claims, if any, that Executive may have and that Executive does
not
now know, or suspect to exist, against the Released Parties and agrees that
this
Agreement extinguishes those claims.
3
4.
Representations
and Warranties.
Executive hereby represents and warrants to the Company as follows:
(a) Review
of Agreement.
Executive has been afforded a period of forty-five (45) days from the date
of
delivery of this Agreement to Executive to (i) read and consider the terms
set
forth in the Agreement, sign, date, and return it to the Company, and (ii)
consider the data, available from the Company’s Human Resources department,
relating to the age and title of the other Company employees who have been
separated in connection with the management restructuring referenced in the
Recitals. Executive has carefully considered the terms and conditions contained
in this Agreement and Executive understands that this Agreement compromises,
settles, bars and waives any and all claims and grievances that the Executive
may have or could possibly have against the Released Parties as of the date
of
this Agreement.
(b) Representation
of Counsel.
Executive has been encouraged by the Company to consult with and seek the advice
of an attorney in connection with his review and execution of this
Agreement.
(c) Early
Execution.
In the
event that the Executive has executed this Agreement prior to the expiration
of
the forty-five (45) day period following the date of delivery of this Agreement
to Executive, Executive agrees and acknowledges that such decision was entirely
voluntary and was not compelled, and that he had the opportunity to consider
this Agreement for the entire forty-five (45) day period referenced in Section
4(a).
(d) Claims.
Executive represents and warrants that, at the time of the signing of this
Agreement, he has not filed, caused to be filed, or permitted to be filed on
Executive’s behalf, any charge, grievance, complaint, suit or action before any
federal, state or local administrative agency or court, including, but not
limited to, a discrimination claim or workers compensation claim, against any
of
the Released Parties. Executive agrees that he will not submit this Agreement
as
evidence of any kind of liability by any of the Released Parties, and that
this
Agreement is not relevant or material with respect to any issue of wrongdoing
or
liability on the part of any of the Released Parties.
(e) Inventions.
Executive has communicated to the Company all inventions, discoveries, concepts
and ideas, whether patentable or not, including but not limited to hardware
and
apparatus, processes and methods, formulas, computer programs and techniques,
as
well as improvements thereof and knowledge related thereto conceived, completed,
or reduced to practice (whether solely by Executive or jointly with others)
during the period of Executive’s employment by the Company, that are (i) related
to the present or prospective business of the Company, (ii) the result of
Executive’s use of the Company’s equipment, facilities, materials or personnel,
or (iii) the result from any work of Executive on behalf of the Company
(collectively, the “Developments”).
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(f) Return
of Company Property.
Executive acknowledges that he has returned to the Company, or has made
arrangements to return, any and all of the Company’s personal property used
during Executive’s employment including, without limitation, the Company’s files
and documents, whether stored in electronic format or in hard copy, (including
sales or prospect lists), portable telephones, access cards, office keys,
laptops, Blackberries, calling cards, credit cards, Palm Pilots, and
pagers.
(g) Withholding.
Executive acknowledges and agrees that the Company may withhold any amounts
from
the Severance Payment (as adjusted) or any other payments made to Executive
hereunder pursuant to any applicable Federal, state, or local tax withholding
laws, rules, or regulations, or pursuant to any other applicable
law.
(h) Obligations.
Executive understands and agrees that he would not receive the consideration
referred to in Section 2 except for Executive’s execution of this Agreement and
compliance with the covenants and obligations set forth herein. Neither the
entering into of this Agreement nor anything contained herein shall in any
way
be construed or considered to be an admission by the Company of non-compliance
with any law or admission of any wrongdoing whatsoever.
(i) Validity
of Agreement.
Executive agrees that this Agreement will not be the subject of any claim of
mistake of fact or duress. Having elected to execute this Agreement and to
comply with the obligations set forth herein, Executive freely and knowingly,
and after due consideration, has entered into this Agreement intending to waive,
settle, and release all claims Executive has against the Company through the
date of this Agreement.
5.
Covenants.
The
Company and Executive, as applicable, hereby covenant and agree as set forth
below.
(a) Nonsolicitation.
Executive agrees that, for a period of two (2) years following the Separation
Date, he shall not (i) hire, attempt to hire, recruit, solicit, persuade, assist
in the hiring of, or entice away from the Company any individual who is (or
was
at any time in the preceding six (6) months prior to such solicitation) an
employee of the Company or an exclusive consultant to the Company, unless such
individual was involuntarily terminated by the Company, or (ii) otherwise
interfere with the Company’s employment or consulting relationship with another
individual.
(b) Noncompetition.
Executive agrees for a period of one (1) year following the Separation Date
not
to accept employment with, perform consulting services for, or otherwise
contribute any of his knowledge, directly or indirectly, to any Multiple Systems
Operator (“MSO”)
or
Regional Xxxx Operating Company (“RBOC”)
each
as such terms are commonly understood in the telecommunications and cable
television industries; provided,
however,
that
Executive shall be permitted to accept employment with such MSO or RBOC if
he
his employment or consulting services relate solely to operations that do not
compete with the Company in any of the Company’s geographic markets as of the
date hereof; provided,
further,
that
Executive may accept employment with a consulting firm that provides consulting
services to such MSO or RBOC so long as Executive performs his obligations
under
Sections 5(a) and 5(d) during the entire period of such consultancy.
Notwithstanding the foregoing, Executive may accept employment that would
otherwise breach the provisions of the preceding sentence if Executive obtains
the prior written consent of the Chief Executive Officer, Chief Financial
Officer or General Counsel of the Company, which consent shall have been deemed
to have been given if a representative of the Company fails to respond to
Executive within five (5) Business Days of Company’s receipt of written notice
of such request.
5
(c) Inventions
Assignment.
Executive hereby assigns to the Company Executive’s entire right, title and
interest in and to any Developments and all copyrights in any such Developments,
and Executive agrees to execute any documentation that Company deems necessary
or advisable to secure Company’s rights in any such Developments and to
cooperate with Company to defend Company’s rights in any such
Developments.
(d) Confidentiality.
Executive agrees not to at any time divulge to any person, firm, corporation
or
other entity (other than the Company in connection with the performance of
his
obligations hereunder) information that is not in the public domain and that
was
received by the Executive during the period of his employment by the Company
with regard to the Company’s customers, prospects, pricing, marketing
information, personnel matters, financial matters, business accounts and
records, corporate documentation or structure, business strategy or any other
information relating to the affairs of the Company in any manner whatsoever,
and
all such information will be kept confidential by Executive and will not be
revealed, except as required by applicable law, to anyone without the prior
written approval of the Chief Executive Officer of the Company. In the event
that Executive is required to disclose any such information in accordance with
applicable law, Executive shall use his best efforts to provide written notice
to the Company of the required disclosure and permit the Company the opportunity
to contest such disclosure or seek a protective order with respect to such
proposed disclosure. In addition, unless otherwise disclosed by the Company,
this Agreement, its existence and its terms and conditions shall be kept
confidential by Executive at all times, except for disclosure to attorneys,
tax
advisors, and other professional advisors in connection with the negotiation
and
implementation of its terms.
(e) Nondisparagement.
Executive agrees that he shall not, directly or indirectly, disparage (in
writing or orally) the Company or any of its officers, directors, employees,
shareholders, lenders, or agents, nor shall the Executive make any public
comment regarding the Company without the prior written consent of the Company’s
Chief Executive Officer; provided,
however,
that
the inclusion in any publicly available biographical statements pertaining
to
Executive of a description of Executive’s title, responsibilities, and
accomplishments while employed with the Company shall not be a breach of this
Section 5(e). In addition, Executive shall not, for a period of two (2) years
following the Separation Date, communicate with any employee, creditor,
stockholder, director, or prospective acquirer of the Company’s assets or
securities with the express or implied purpose of (i) disparaging the Company
or
any of its officers, directors, employees, shareholders, lenders, or agents,
or
(ii) generating or augmenting employee or employees’ dissatisfaction with the
Company or its business.
6
(f) Transition
Plan.
Executive will promptly provide to the Company a complete itemization and
description of matters and projects that have been managed by Executive and
that
are in progress as of the Separation Date, along with reference to the other
Company employees involved in such projects (the “Transition
Memorandum”).
Executive shall also promptly prepare evaluations of each of Executive’s direct
reports for the first two quarters of 2006 in accordance with the Company’s
customary employee evaluation practices. The Company shall provide Executive
with the resources (computer access, printer, etc.) adequate to fulfill his
responsibilities under this Section 5(f). Executive agrees to be reasonably
available for sixty (60) days following the Separation Date to consult with,
cooperate with, and provide information to the Company regarding any matter
in
which Executive was involved during his employment with the Company, and to
update the Transition Memorandum as needed during such period.
(g) Job
Performance Documentation.
Upon
request, the Company will provide to Executive a written performance evaluation
relating to the most recent fiscal year, or portion of a fiscal year, that
Executive was employed by the Company, in a form and to the extent consistent
with Company’s past employment evaluation practices.
(h) Cooperation.
For a
period of three (3) years after the Separation Date, Executive agrees that
he
shall fully cooperate with the Company with respect to any litigation in which
the Company may become involved in the future, and to make himself reasonably
available, upon the request of the Company, to provide truthful, accurate,
and
complete information at interviews, depositions, and court appearances. The
Company agrees to reimburse Executive for any reasonable business expenses
associated with such cooperation.
(i) COBRA.
Beginning on the date that the Company no longer provides the benefits set
forth
in Section 2(c), the Executive shall be eligible for health insurance coverage
pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act
of
1985 (“COBRA”).
(j) Travel
and Expense Reimbursement.
Executive agrees to submit all applicable requests for reimbursement of travel
and other expenses incurred by Executive prior to the Separation Date within
thirty (30) days following the Separation Date, and the Company shall thereafter
promptly reimburse Executive for such expenses in accordance with its customary
expense reimbursement practices. Executive agrees that he shall not be entitled
to reimbursement for any expenses unless a request for such reimbursement has
been submitted within the period set forth in this Section 5(i).
(k) Expenses.
To the
extent permitted by law, Executive expressly agrees that, if the Company
complies with the material terms of the Agreement and the Executive nevertheless
commences a legal action against the Company, Executive shall (i) be obligated
to return to the Company the full amount of the Severance Payment, the Bonus
Payment, and the value of any and all benefits conferred upon Executive
hereunder, and (ii) and all indemnify the Company for the full and complete
costs, including reasonable attorneys’ fees (whether incurred in a third party
action or in an action to enforce this Agreement), court costs, and other
related expenses.
7
6.
Miscellaneous.
(a) Severability.
In the
event that any provision of this Agreement is challenged by the Executive or
his
representatives and declared illegal or unenforceable by any court of competent
jurisdiction and cannot be modified to be enforceable, such provision shall
immediately become null and void, leaving the remainder of the Agreement in
full
force and effect. If as a result of such challenge, however, any portion of
the
general release language found generally (but not only) in Section 3 of this
Agreement is ruled to be unenforceable, Executive agrees that he shall repay
to
the Company the Severance Payment, the Bonus Payment, and value of any and
all
benefits conferred upon Executive hereunder, and the Company shall have no
further obligations under this Agreement.
(b) Public
Disclosure.
Executive understands and agrees that the Company may be obligated under
applicable Federal securities laws to publicly disclose the separation of
Executive from the Company, including the possible disclosure of this Agreement,
and the Executive hereby consents to any such disclosure, the scope and content
of which shall be in the Company’s sole discretion.
(c) Injunctive
Relief.
The
Executive acknowledges that monetary damages would be insufficient to compensate
the Company in the event of breach or threatened breach of any of the provisions
of this Agreement. Should Executive violate or threaten to violate any of the
provisions of this Agreement, the Company will be entitled to an injunction
to
stop the Executive from continuing such breach or threatened breach.
(d) Governing
Law.
The
Parties agree, notwithstanding applicable conflict of laws principles, that
this
Agreement shall be governed by the laws of the Commonwealth of
Virginia.
(e) Venue;
Jurisdiction; Waiver.
The
Parties agree that the proper venue for the enforcement of this Agreement will
be the state courts of the Commonwealth of Virginia, and any Federal court
located in the Commonwealth of Virginia, and the Parties hereby irrevocably
agree to the jurisdiction of such courts in connection with any dispute arising
from the terms of, or the performance or nonperformance of any of the
obligations of the Parties arising under, this Agreement. EACH OF THE PARTIES
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATED
INSTRUMENTS CONTEMPLATED HEREBY.
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(f) Counterparts.
This
Agreement may be executed by the Parties in one or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(g) Entire
Agreement.
This
Agreement constitutes the entire agreement, and except as set forth in Section
2(d), supersedes any and all prior agreements, and understandings, both written
and oral, between the Parties hereto with to the subject matter hereof except
as
otherwise provided herein.
(h) Amendment.
No
provisions of this Agreement may be modified, waived, amended, or discharged
unless agreed in writing by the Parties.
(i) Assignment.
This
Agreement shall be binding upon and shall inure to the benefit of each of the
Parties, and their respective heirs, legatees, executors, administrators, legal
representatives, successors and assigns.
(j) No
Waiver.
No
waiver by either Party of any breach by the other Party shall be deemed a waiver
of any similar or dissimilar breach of any provisions or conditions of this
Agreement, whether occurring contemporaneously, in the past or at a subsequent
time.
(k) Notice.
FOR A
PERIOD OF SEVEN (7) DAYS FROM THE DATE THAT EMPLOYEE SIGNS THIS AGREEMENT,
EMPLOYEE MAY REVOKE THIS AGREEMENT BY NOTIFYING THE COMPANY IN WRITING OF THE
EMPLOYEE’S INTENT TO DO SO. THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR
ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED. THIS SEVEN (7) DAY PERIOD
MAY NOT BE SHORTENED BY THE PARTIES, BY AGREEMENT OR OTHERWISE.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date
first written above.
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RCN
CORPORATION
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|
By:
|
/s/
Xxxxxxxx X. Xxxxxxx
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|
Name:
|
Xxxxxxxx
X. Xxxxxxx
|
|||
|
Title:
|
SVP,
General Counsel & Secretary
|
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|
Date:
August 4, 2006
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||||
|
EXECUTIVE
|
||||
| /s/ Xxxxxxx Xxxxx Xxxxx | ||||
|
Xxxxxxx
Xxxxx Xxxxx
|
||||
|
Date:
August 4, 2006
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