EXHIBIT 10.5
November 20, 1997
VIA TELEFAX
Xxxx X. Xxxxxxx
Xxxxxxx & Xxxxxx LLP
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
RE: XXXXXXX XXXXXXXXXX
Dear Xxxx:
Pursuant to the various oral and written communications between our
respective firms yesterday and today, it is my understanding, and the purpose of
this letter is to confirm that, Xxx Xxxxxxxxxx ("Xxxxxxxxxx") and First American
Railways, Inc. ("First American" or "the Company") have agreed to resolve all
issues between them regarding Xxxxxxxxxx'x employment on the following terms:
1. Xxxxxxxxxx shall be paid his full base salary by First American for
six (6) months (December, 1997 through May 1998) following his resignation.
2. First American shall continue to provide and shall pay for
Xxxxxxxxxx'x medical, life and disability insurance for the same six (6) months
following his resignation, during which period said insurance coverages shall
remain in full force and effect on exactly the same terms and conditions as the
insurance that Xxxxxxxxxx presently has through the Company.
3. First American confirms that it maintains a directors & officers
insurance policy in full force and effect, and that said policy has been and is
in effect through the date of Xxxxxxxxxx'x resignation. A copy of that policy
will be provided to you so that you can determine the extent to which Xxxxxxxxxx
is afforded coverage thereunder.
4. The parties shall agree to maintain in full and complete
confidentiality the terms and conditions of this settlement, any allegations
that have come before the board of directors concerning Xxxxxxxxxx, and any
other issue relating to the investigation for sexual harassment or Xx.
Xxxxxxxxxx'x resignation, except as otherwise required by law and except to the
extent such information may have been disclosed prior to the execution of this
letter agreement.
Xx. Xxxx X. Xxxxxxx
November 20, 1997
Page 2
5. First American and Xxxxxxxxxx shall execute and exchange general
mutual releases releasing each other from any and all claims that have arisen,
will arise or could arise relating in any way to Xxxxxxxxxx'x employment with or
his capacity as a stockholder of the Company, including but not limited to any
claims relating to sexual harassment, breach of fiduciary duties,
discrimination, misrepresentation, failure to advise the Board of Directors,
etc. This release in no way waives either parties' right to assert any defense
against any party, including each other, in any lawsuit filed by any third
party, and does not waive either parties' right to assert indemnity or
contribution against any party, including each other, in any such lawsuit.
6. First American shall insure that Xxxxxxxxxx is released immediately
from any and all personal guarantees executed by him as a result of his
association with First American, including the personal guarantee given in
connection with the acquisition of the Durango Silverton Narrow Gauge Railroad
and the personal guarantee given in connection with the lease of a GMC Yukon for
use in Durango. It is explicitly understood by the parties that obtaining a
release from the guarantees, as set forth in this paragraph, is a condition
subsequent of this agreement. First American shall provide within a reasonable
time written confirmation that the personal guarantees have been released.
7. To the extent allowed by law, Xxxxxxxxxx shall receive a copy of any
investigative files and reports generated by Xxxxx Xxxxxx or her firm in
connection with the investigation of the allegations against him.
8. The parties agree that they shall not disparage each other in any
way.
9. Xxxxxxxxxx shall be released from any and all non-compete
obligations set forth in his Amended and Restated Employment Agreement or in any
other employment agreement that he has or may have had with First American or
its subsidiaries.
10. Xxxxxxxxxx shall resign as an officer, director and employee of
First American and all of its subsidiaries effective November 20, 1997, except
that, at First American's option, Xxxxxxxxxx may be retained as an employee (but
without any responsibilities or authority) in order to provide the insurance
coverages described in paragraph 2 above.
11. First American shall issue a press release announcing Xxxxxxxxxx'x
resignation in language substantially and materially the same as the release
submitted to Xxxxxxxxxx'x attorneys on Wednesday, November 19, 1997.
12. Xxxxxxxxxx shall be permitted to send a courier to take immediate
possession of his personal files and belongings.
Xx. Xxxx X. Xxxxxxx
November 20, 1997
Page 3
13. Xxxxxxxxxx shall be provided full reimbursement of all expenses
incurred on behalf of the Company or in the scope of his employment with the
Company, and not yet paid to him, including expenses that Xxxxxxxxxx has
incurred already for future travel to the extent such expenses cannot be
recovered by canceling such future travel arrangements.
14. This letter also confirms that Xx. Xxxxxxxxxx has 168,333 options
on shares already vested in the Company.
This letter constitutes the settlement agreement between First
American and Xx. Xxxxxxxxxx. Please have Xxxxxxxxxx execute this letter and
return a copy to me by fax. Xxxxxxxxxx'x resignation from the Company as set
forth above is conditioned upon and will effective upon his execution of this
letter. I hereby represent to you that I have authority to execute this letter
on behalf of First American.
Very truly yours,
Xxxxx X. Xxxxxxxx
Agreed:
/S/ XXXXXXX XXXXXXXXXX
---------------------------------
Xxxxxxx Xxxxxxxxxx
DATED: NOVEMBER 20, 1997
