CONFIDENTIAL SEVERANCE AGREEMENT AND GENERAL RELEASE
This Agreement ("Agreement") made as of the 15 day of May, 1998 (the
"Effective Date"), by and between XXXX X. XXXXX, having an address at 00
Xxxxxxxx Xxxxx, Xxxxxxxx, XX 00000 ("Frost"), and ENVIROTEST SYSTEMS CORP., a
Delaware corporation, with principal offices at 000 Xxxxxxxx Xxx, Xxxxxxxxx,
Xxxxxxxxxx, 00000, all affiliates and parents, including but not limited to,
ENVIROTEST TECHNOLOGIES, INC. (hereinafter collectively referred to as the
"Company").
RECITALS
WHEREAS, the Company and Frost desire to enter into an agreement to set
forth the terms of Frost's separation from the Company and a release of claims.
NOW THEREFORE, in return for the promises, consideration, mutual covenants,
agreements, and conditions provided for in this Agreement, the receipt and
adequacy of which are hereby acknowledged by the parties, and intending to be
legally bound, Frost and the Company hereby agree as follows:
COVENANTS
1. In consideration of the execution of this Agreement and the release
and waiver contained herein, the Company agrees that:
a. The Company shall provide Frost with salary continuation, which
would not otherwise be paid, at his present rate of pay for nine
(9) months from the date of his resignation, payable in
accordance with the Company's regular payroll schedule and
practices. The Company will deduct taxes and make other
deductions required for wages by state and federal law.
b. Company will pay Frost for his earned and unused vacation time,
minus required and authorized withholding deductions, which Frost
agrees is the total amount of earned and unused vacation time due
and owing to Frost as of the date of resignation of his
employment, and that no further vacation time shall be earned
after that date.
x. Xxxxx and his dependents will receive family medical, dental,
disability and life insurance coverage and executive medical
reimbursement identical to those provided by the Company to its
vice presidents, at Company expense, through February 15, 1999.
Pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1985, from and after February 15, 1999, Frost will continue to be
eligible for coverage under the Company's group medical,
dental and life plans for as long as permitted by applicable law,
but he will be personally responsible for the payment of all
premiums due under such plans. Frost may at any time convert his
group medical and dental benefits to an individual policy. The
Company will provide Frost with all necessary forms to convert
such policies and will give Frost notice of the amount necessary
to continue premiums on the group medical plans and notice of his
option to convert the plans into individual plans.
d. In the event of Frost's death prior to payment of the benefits
set forth in Paragraphs 1(a) and 1(b) above, all remaining
compensation and benefits described therein will be provided to
Frost's wife, Xxxxxx Xxxxx, if she survives him. If not, all
payment obligations under those paragraphs will be made to
Frost's estate.
x. Xxxxx'x participation, if any, in any employee benefit or
retirement plans will be determined by the terms of those plans,
or as otherwise required by law.
f. Pursuant to action taken by the Compensation Committee of the
Board of Directors of the Company, Frost has been granted
incentive stock options to purchase 90,000 shares of Class A
Common Stock of Envirotest Systems Corp. under the Envirotest
Systems Corp. Stock Option Plan. Of the 90,000 shares subject to
option, 15,000 options (the "Vested Options") have vested under a
Stock Option Agreement dated October 24, 1996 (the "October
Agreement"). The Company hereby (i) agrees that the Vested
Options may be exercised in accordance with the terms of the
October Agreement, and (ii) amends the October Agreement to
provide that Frost shall have the full ten-year term of the
October Agreement to exercise the Vested Options. All other
options granted to Frost, including the remaining options granted
under the October Agreement and options granted under an option
agreement dated January 14, 1998, are hereby canceled.
g. In addition to the benefits described elsewhere in this
Agreement, the Company agrees:
(i) To permit Frost to participate in an employee loan or
other financial assistance program, if any, established by
the Company and made available to all Envirotest employees
in connection with the exercise of Envirotest stock
options. Frost acknowledges and agrees that (1) such
program does not currently exist, (2) the Company is under
no obligation to establish any such program, and (3) the
Company does
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not represent, warrant or covenant that any such
program will ever be established.
(ii) To permit Frost to keep permanently the laptop computer
issued to him by Envirotest (including reasonable
peripherals such as the printer and docking station).
(iii) To permit Frost to keep permanently the cellular telephone
issued to him by Envirotest and currently in his
possession.
(iv) To provide to Frost Outplacement Services (not-to-exceed
$1,500.00 in the aggregate) to assist him in obtaining
employment.
2. By signing this Agreement, and accepting the consideration specified
above, Frost knowingly and voluntarily agrees as follows:
x. Xxxxx hereby resigns his position as Vice President effective
May 15, 1998.
x. Xxxxx hereby waives, releases and forever discharges the
Company, its shareholders, officers, directors, agents,
employees, and all affiliates of the foregoing personally as
individuals and as shareholders, officers, directors, agents,
employees, and affiliates, and their successors and assigns
(severally and collectively "Releasees") from, and covenants not
to xxx or charge them individually, jointly or severally, on, any
and all claims or causes of action arising out of his employment
by the Company, under any local, state, or federal law or
regulation, including without limitation, those arising under the
Age Discrimination in Employment Act of 1967 (ADEA), Title VII of
the Civil Rights Act of 1964, as amended, the Older Workers
Protection Act of 1990, the Labor Management Relations Act,
Employee Income Retirement Security Act (ERISA), the Family and
Medical Leave Act of 1993, the Americans with Disabilities Act,
the Fair Employment and Housing Act, and the California Civil
Rights Act, or under common law tort or contract theory, whether
in law or equity, known or unknown, asserted or unasserted,
suspected or unsuspected, which Frost or his heirs, has ever had,
or now has against Releasees. The Company waives, releases and
forever discharges Frost, his spouse and his heirs (severally and
collectively the "Frost Releasees") from, and covenants not to
xxx or charge the Frost Releasees on any and all claims or causes
of action arising out of Frost's employment by the Company under
any local, state or federal law or regulations or any common law
tort or contract theory, whether in law or equity, known or
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unknown, asserted or unasserted, suspected or unsuspected, which
the Company, or its successors, has, ever had, or now has against
the Frost Releases. Frost represents and acknowledges that he
has been provided a reasonable opportunity to consult with an
attorney regarding the nature and effect of this Release and
Waiver, and has not been advised to do so by the Company.
x. Xxxxx and the Company hereby expressly waive Section 1542 of the
California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
Frost and the Company also expressly waive the benefit of any
other statute or rule of law, which, if applied to this
Agreement, would otherwise exclude from its binding effect
any claims released hereby not now known to exist by Frost
and/or the Company.
x. Xxxxx agrees and acknowledges that he has received all share
certificates and stock option agreements due him, and that he
will not receive an additional grant of stock options for
services rendered during the Company's current fiscal year
or otherwise.
3. In consideration of this Agreement and to induce the Company to enter
into such Agreement, Frost hereby makes the following representations to and
agreements with the Company:
a. Except as required by legal proceeding, Frost agrees that he will
not make any statements or disclose any information which in the
Company's reasonable judgment are inimical to the interest of the
Company or are derogatory about the Company, its stockholders,
officers, directors, systems, products, or services.
x. Xxxxx will not disclose or cause or allow to be disclosed any of
the terms, conditions, amounts or any other details of this
Agreement; PROVIDED, HOWEVER, that nothing shall preclude Frost
from making such disclosure as may be required by applicable law
or as may be necessary in the course of prosecuting or defending
litigation concerning this Agreement; and PROVIDED FURTHER that
nothing shall
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preclude Frost from fully disclosing to the preparer of his tax
return the nature and source of his taxable income, nor from
fully disclosing to his attorney the terms of this Agreement as
provided in Paragraph 3(a) above.
4. Frost recognizes and acknowledges that Company's, its parents', its
affiliates', their divisions' and vendors' and the users of their services'
("users") confidential financial records, financial and other plans,
engineering methods and systems, marketing methods and systems, advertising
strategies and methods, strategic plans, databases, trade secrets, user
lists, information regarding users and potential users, staff members, or
suppliers, reports prepared by consultants, other information, observations,
data and ideas obtained by him during the course of his employment at the
Company, or other proprietary information of the Company (collectively
referred to as the "Confidential Information"), are valuable, special, and
unique assets of these entities, divisions, vendors, and users. Therefore,
Frost agrees not to disclose any Confidential Information to any person,
firm, corporation, or other entity whatsoever without advance written
authorization by the Company or unless and until the information becomes
generally available to the public through proper means not in violation of
this Agreement. Moreover, Frost agrees not to use any Confidential
Information unless and until it becomes generally available to the public
through proper means not in violation of this Agreement. Frost will return to
Company all documents and other information that are the property of the
Company that are in his possession or control and that in any way relate to
the Company or which reflect or contain information or data or ideas
generated or collected by or on behalf of the Company, including, but not
limited to, all documents, memoranda, notes, records, reports, manuals,
correspondence, user lists, books, slides, databases, supplier, contractor,
or consultant lists and information, presentations, flow charts, outlines,
financial information, projections, user marketing documents and plans,
whether stored on paper, computer, tape, or any other means of data storage.
Frost will return to the Company no later than June 1, 1998, any keys,
equipment, materials, credit cards, and any other property belonging to the
Company.
5. Frost acknowledges that the services rendered by him to the Company
were of a special, unique and extraordinary character and, in connection with
such services, he has had access to confidential information vital to the
Company's business. By reason of this, Frost consents and agrees that if he
violates Paragraph 3 or Paragraph 4 of this Agreement, the Company would
sustain irreparable harm and, therefore, in addition to any other remedies
which the Company may have under this Agreement or otherwise, the Company
shall be entitled to apply to any court of competent jurisdiction for
equitable relief, including without limitation an injunction restraining
Frost from committing or continuing any such violation of this Agreement.
Moreover, Frost and the Company hereby agree that the actual damages arising
from the breach by Frost of Paragraph 3 or Paragraph 4 of the Agreement would
be extremely difficult or impracticable to ascertain under the circumstances,
and therefore, in such event, the Company shall have the right to recover the
sum of $100,000 in liquidated damages. In addition, the Company may elect to
seek other remedies relating to breaches of Paragraph
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3 or Paragraph 4 in any court of competent jurisdiction in lieu of arbitration
of such claims.
6. Frost represents and acknowledges that in executing this Agreement, he
does not rely and has not relied upon any representation or statement not set
forth herein made by any of the Company's employees, agents, representatives, or
attorneys with regard to the subject matter, basis or effect of this Agreement
or otherwise.
7. The obligations of the parties hereto are severable and divisible;
and, in the event any consideration flowing from Frost or the Company as
described herein is determined to be unlawful or unenforceable, the remainder of
this Agreement shall be enforceable.
8. Frost expressly represents and warrants that he is the sole owner of
the actual or alleged claims, demands, rights, causes of action, and other
matters that are released herein; that the same have not been transferred or
assigned or caused to be transferred or assigned to any other person, firm,
corporation or other legal entity; and that he has the full right and power to
grant, execute and deliver the releases, undertakings, and agreements contained
herein.
9. Neither the negotiation nor the execution of this Agreement shall
constitute an acknowledgment or admission of any kind by the Company that it, or
any of the Releasees, jointly or severally, has violated any federal, state or
local law or regulation, or breached any common law or other obligation or duty
to Frost.
10. Except as otherwise provided in Paragraph 5 of this Agreement, any
dispute arising between the Company and Frost with respect to the performance or
interpretation of this Agreement shall be submitted to arbitration in San
Francisco, California, for resolution in accordance with the rules of the
American Arbitration Association, modified to provide that the decision by the
arbitrators shall be binding on the parties, shall be furnished in writing,
separately and specifically stating the findings of fact and conclusions of law
on which the decision is based, and shall be rendered within ninety (90) days
following impanelment of the arbitrators. The cost of arbitration will
initially be borne by the party requesting arbitration. Following a decision by
the arbitrators, the cost of arbitration will be divided as directed by the
arbitrators.
11. This Agreement shall be subject to and governed by the laws of the
State of California.
12. The terms and conditions contained herein constitute the entire
agreement between the parties and supersede all previous communications, either
oral or written, between the parties with respect to the subject matter of this
Agreement, and no agreement or understanding varying or extending the same shall
be binding upon either party unless in writing and signed by or on behalf of
such party.
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13. FROST STATES THAT HE HAS READ THE FOREGOING AGREEMENT, FULLY
UNDERSTANDS ITS CONTENT AND EFFECT, AND WITHOUT DURESS OR COERCION, KNOWINGLY
AND VOLUNTARILY ASSENTS TO ITS TERMS. FROST ALSO ACKNOWLEDGES THAT HE HAS BEEN
ADVISED AND GIVEN AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING
THIS AGREEMENT, AND THAT HE HAS HAD TWENTY-ONE DAYS TO CONSIDER WHETHER TO
EXECUTE THIS AGREEMENT. FROST FURTHER ACKNOWLEDGES THAT WITHIN SEVEN DAYS FROM
THE DATE OF THE EXECUTION OF THIS AGREEMENT HE MAY, AT HIS SOLE OPTION, REVOKE
THE AGREEMENT UPON WRITTEN NOTICE TO XXX XXXXXX, VICE PRESIDENT, AND THAT THE
AGREEMENT WILL NOT BECOME EFFECTIVE UNTIL THE SEVEN-DAY REVOCATION PERIOD HAS
EXPIRED.
14. In the event of any controversy or dispute arising out of or related
to this Agreement, the prevailing party shall be entitled to recover from
non-prevailing party actual expenses, including without limitation, reasonable
attorney's fees and actual costs incurred.
15. This Agreement may be executed in two or more counterparts, each of
which shall be considered an original, but all of which taken together shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement as of the day and year first above written.
ENVIROTEST SYSTEMS CORP.
By: [Illegible]
Its: Vice President
ENVIROTEST TECHNOLOGIES, INC.
By:
Its:
/s/ Xxxx X. Xxxxx
-----------------------------
Xxxx X. Xxxxx
Xxxxxx X. Xxxxx, as wife of Xxxx X. Xxxxx, hereby acknowledges that she has read
the foregoing agreement and agrees to be bound by its terms.
/s/ Xxxxxx X. Xxxxx
------------------------
Xxxxxx X. Xxxxx
Dated: 5/27/98
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