SEVERANCE AND RELEASE AGREEMENT
This Severance and Release Agreement (this "Agreement") is made and
entered into as of the 31st day of January, 2001 (the "Effective Date") by and
between XXXXXXX X. XXXXXXXX ("Executive") and AUTHORISZOR INC. ("Employer" or
the "Company")(the term Employer shall include any parent, affiliate, or
subsidiary companies) (the signatories to this Agreement will be referred to
collectively as the "Parties" and individually as a "Party") as follows:
WHEREAS, Employer employed Executive as its Chief Executive Officer
from January 1, 2000 to January 31, 2001; and
WHEREAS, Executive and Employer desire to amicably sever the employment
relationship that has existed between them; and
WHEREAS, in consideration of the services rendered by Executive and the
additional undertakings provided for herein, Employer has agreed to compensate
Executive by providing the severance compensation described in this Agreement;
and
WHEREAS, both parties have read and understand the terms and provisions
of this Agreement, and both parties desire and intend to be bound by the terms
and provisions of this Agreement.
NOW, THEREFORE, in consideration of the covenants and mutual promises
and agreements herein contained, and other valuable consideration, the
sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. Release and Waiver Agreement/Claims Covered by Agreement. Executive
acknowledges and understands that this Agreement is a release and waiver
contract, and that this document is legally binding. Executive and Employer
understand that by signing this Agreement, each party is agreeing to all of the
provisions set forth in the Agreement, and has read and understood each
provision. Executive and Employer acknowledge and understand that this Agreement
applies only to claims that accrue or have accrued prior to the date that this
Agreement is executed.
2. Termination of Employment. Executive and Employer acknowledge that
the effective date of the termination of Executive's employment with Employer
shall be January 31, 2001. Executive shall submit a separate letter of
resignation, in the form evidenced by Attachment "1" hereto, at the time that
payment pursuant to Section 3(A)(1) is received by the Executive. By such
letter, Executive shall resign both from his position as President, Chief
Executive Officer and Interim Chief Financial Officer, as well as his position
on the Company's Board of Directors, including but not limited to Authoriszor
Inc., Authoriszor U.S. Corporation, Authoriszor Holdings Corporation, and
Authoriszor Holdings Limited. In the event the Agreement is signed by all
parties hereto prior to the effective date of termination, Executive
acknowledges that during the period after such execution and prior to the
effective date of termination Executive's successors in office shall have the
power and authority to carry out and execute the duties of such offices;
provided however, that such power and authority shall cease to exist if Employer
breaches its obligations under Section 3(a)(1) hereof.
3. Severance Compensation.
A. In exchange for the consideration provided by Executive in this
Agreement, including, without limitation, the consideration provided for in
Sections 5, 6, and 7, Employer agrees to pay to Executive the following:
1. By the close of business on January 31, 2001:
a. Compensation in the amount of Nineteen Thousand
Seven Hundred Ninety-one Dollars and Sixty-seven
Cents ($19,791.67), minus applicable withholdings
for federal and state income tax, FICA, and any
other withholdings required by federal, state, or
local law, which payment reflects compensation
earned but unpaid through January 31, 2001, as
well as one month's prorated bonus.
b. Additional severance payment, in lump sum, in the
amount of Four Hundred Fifty Thousand Dollars and
No Cents ($450,000.00), minus applicable
withholdings for federal and state income tax,
FICA, and any other withholdings required by
federal, state, or local law. Federal income tax
withholdings shall be made at the supplemental
income rate of twenty-eight percent (28%).
Executive agrees to indemnify and hold harmless
Employer if any federal, state, or local
government authority seeks payment of additional
taxes, costs, assessment, penalties, damages,
fees, or other losses from Employer in connection
with this payment to Executive.
c. Additional payment in an amount equal to four (4)
weeks of vacation time, which amount Employer and
Executive stipulate equals the sum of Twenty-Three
Thousand Nine Hundred Fifty-Eight Dollars and No
Cents ($23,958.00), minus applicable withholdings
for federal and state income tax, FICA, and any
other withholdings required by federal, state, or
local law.
d. Additional payment in the amount of Thirty-one
Thousand Two Hundred Fifty Dollars and No Cents
($31,250.00), minus applicable withholdings for
federal and state income tax, FICA, and any other
withholdings required by federal, state, or local
law, such payment representing Executive's October
to December bonus for the year 2000.
2. On January 31, 2002, payment in the amount of Two Hundred
Fifty Thousand Dollars and No Cents ($250,000.00), minus
applicable withholding for federal and state income tax,
FICA, and any other withholdings required by federal, state
or local law. Federal income tax withholdings shall be made
at the supplemental income rate of twenty-eight percent
(28%). Executive agrees to indemnify and hold harmless
Employer if any federal, state, or local government
authority seeks payment of additional taxes, costs,
assessments, penalties, damages, fees or other losses from
Employer in connection with this payment to Executive. Such
payment shall be conditioned upon Executive's compliance in
all material respects with this Agreement, and shall not be
made if Executive has revoked his releases and waivers under
the Age Discrimination in Employment Act pursuant to Section
4(C) of this Agreement. With respect to this payment, on
January 31, 2001, Employer shall place Two Hundred Fifty
Thousand Dollars and No Cents ($250,000.00) in an interest
bearing escrow account, and shall release such funds to
Executive before close of banking day on January 31, 2002.
Any interest earned on the money deposited in escrow shall
be retained by Employer.
3. With respect to group medical coverage which Executive
elects to reinstate and continue in accordance with the
terms of the Employer's medical plan and the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended,
("COBRA"), Employer agrees to pay on behalf the Executive
the applicable premium which is required to reinstate and
continue such group medical coverage, but only to the extent
such coverage was in effect on the date immediately prior to
the Executive's severance date. Such premium payments by the
Employer shall continue until the earlier of the following:
a. the first date that the Executive becomes eligible
for medical coverage under any other group medical
plan;
b. the date the Executive elects to discontinue
medical coverage for himself and his dependents;
c. the first date that the Executive is no longer
otherwise eligible for coverage under COBRA, as
determined by the Employer; and
d. the first anniversary of the employee's severance
date.
Employee shall be required to provide written
notice of the events described in (a) or (b)
above to the Employer within five (5) days of the
occurrence of such an event.
Once the Employer's obligation to pay the
applicable COBRA premiums on behalf of the
Executive ceases, Executive may continue COBRA
coverage for the remainder of the statutory
period by paying all applicable premiums in
accordance with COBRA and by otherwise satisfying
all terms and conditions required to qualify for
COBRA continuation coverage.
Nothing in this Agreement shall be construed as
granting the Executive any additional rights or
extensions of continuation coverage not otherwise
provided by COBRA. Consequently, Employer will
have no obligation to pay COBRA premiums pursuant
to this Agreement once Employer determines that
Executive is no longer eligible for COBRA
coverage.
B. In exchange for the consideration provided by Executive in this
Agreement, including, without limitation, the consideration provided for in
Sections 5, 6, and 7, Employer further agrees to enter into a stock option
agreement, in the form attached hereto as Attachment "2," to provide Executive
with the option to purchase a cumulative total of 200,000 shares of the
Company's common stock, $.01 par value (the "Company Common Stock") exercisable
in increments of (i) 100,000 shares exercisable on or after January 31, 2001,
and (ii) 100,000 shares exercisable on or after January 31, 2002, all at an
exercise price of $6.75 per share, upon execution of this Agreement. This
Agreement shall not affect Executive's rights to the 200,000 share options
granted under previous stock option agreements and which are vested as of the
date of the execution of this Agreement. Any stock option agreements under which
Executive is not vested as of the date of this Agreement are, by agreement with
the parties, hereby rescinded and declared null and void.
C. In exchange for the consideration provided by Executive in Sections
5, 6, and 7, Employer agrees to permit Executive to utilize, at his own expense
(if any) the firm of Xxxxxxxx & Struggles International, Inc. to assist
Executive in obtaining new employment.
D. Executive acknowledges and agrees that the payment of monies and
provisions of benefits hereunder, if any, constitute monies and benefits to
which Executive was not previously entitled and, further, that the payment of
monies and provision of benefits hereunder, if any, constitute fair and adequate
consideration for the execution of this Agreement.
4. Consultation with Attorney, Review Period and Revocation
Period.
A. Executive acknowledges that Employer has advised him of his right
and opportunity to consult with an attorney concerning the meaning, import, and
legal significance of this Agreement.
B. Executive acknowledges that he has been provided with a period of
at least twenty-one (21) days within which to consider, review and reflect upon
the terms of this Agreement.
C. Executive acknowledges and understands that he shall have seven (7)
days following the execution of this Agreement in which to revoke his releases
and waivers in this Agreement under the Age Discrimination in Employment Act
after he signs it; any amounts payable under Section 3(A)(2) of this Agreement
shall be paid no sooner than the expiration of seven (7) days after Executive
signs it. Any revocation under this Section shall not affect the enforceability
of any other provision of this Agreement, and all other provisions, releases,
waivers, and payments hereunder shall remain enforceable.
5. Release and Waiver by Executive.
A. For and in consideration of the severance compensation referenced
above, as well as the covenants and/or promises contained herein, the receipt
and sufficiency of which are hereby acknowledged, Executive, on behalf of
himself and his family, assigns, representatives, agents, heirs and/or
attorneys, if any, hereby covenants not to xxx and fully, finally, and forever
releases, acquits and discharges Employer, along with its former and present
parent, subsidiary, and/or affiliate companies, along with its predecessors,
successors and/or assigns, if any, as well as Employer's officers,
administrators, directors, shareholders, investors, general or limited partners,
representatives, agents, Executives and/or attorneys, if any, jointly and
severally (collectively, the "Employer Released Parties"), from any and all
claims, demands, actions, liabilities, obligations and/or causes of action of
whatever kind or character, whether known or unknown, which Executive has or
might claim to have against the Employer Released Parties for any and all
injuries, harm, damages (actual and punitive), penalties, costs, losses,
expenses, attorneys' fees and/or liability or other detriment, if any,
whatsoever and whenever incurred or suffered by Executive arising out of,
relating to, or in connection with any transaction, action, inaction, omission,
or event which occurred or failed to occur prior to the execution of this
Agreement, including, without limitation:
(i) any claim relating to breach of oral or written employment
contract, including, without limitation, any claim for breach of the
Executive Employment Agreement between Executive and Employer, dated
January 1, 2000;
(ii) any claim under state or federal law which provides civil
remedies for the enforcement of rights arising out of the employment
relationship, including, without limitation, discrimination claims
such as claims or causes of action under Title VII of the Civil Rights
Act of 1964, as amended, 42 X.X.X.xx. 2000 et. seq.; The Civil Rights
Act of 1866, 42 U.S.C. ss. 1981; The Civil Rights Act of 1991, 42
X.X.X.xx. 1981a; Age Discrimination in Employment Act, 29 X.X.X.xx.
621 et. seq.; Americans With Disabilities Act, 42 X.X.X.xx. 12101 et.
seq.; Fair Labor Standards Act, 29 X.X.X.xx. 201, et. seq.; Employee
Retirement Income Security Act, 29 X.X.X.xx. 1000 et. seq.; Family and
Medical Leave Act, 29 X.X.X.xx. 2601, et. seq.; or any other statute
prohibiting discrimination in employment under any federal law or the
law of any state; or
(iii) claims for unpaid or withheld wages, bonuses, benefits,
commissions, or profit-sharing, wrongful discharge or termination,
promissory estoppel, fraud, breach of any implied covenants, assault,
battery, negligence, negligent hiring, negligent retention,
defamation, invasion of privacy, slander, or intentional infliction of
emotional distress.
B. Executive and Employer acknowledge and agree that the release set
forth in Section 5(A) does not include any claims Executive may have against
Employer for its failure to comply with or breach of any provision in this
Agreement.
6. Provisions Specific to Executive Employment Agreement dated January
1, 2000.
A. Executive agrees that he is still bound by the obligations and
covenants contained in Paragraphs 14 through 23 of the Executive Employment
Agreement regarding non-disclosure of confidential information, non-competition,
and non-interference. Such Paragraphs are incorporated herein by reference as if
set forth in full. Executive expressly agrees that he has been provided good and
valuable consideration for such obligations and covenants.
B. Executive and Employer mutually release one another from all other
obligations contained in the Executive Employment Agreement.
7. Return of Company Property. Executive acknowledges that all
non-public memoranda, notes, records, reports, manuals, handbooks, drawings,
blueprints, books, papers, letters, formulas, client and customer lists,
contracts, software programs, instruction books, catalogs, information and
records, lines of code, technical manuals and documentation, drafts of
instructions, guides and manuals, maintenance manuals, and other documentation
(whether in draft or final form), and other sales information and aids relating
to Employers business, and any and all other documents containing Proprietary
Information (as defined below) furnished to Executive by any representative of
Employer or otherwise acquired or developed by Executive in connection with his
employment with Employer (collectively, "Recipient Materials") shall at all
times be the property of Employer. By January 31, 2001, Executive shall return
to Employer his Company-owned vehicle and shall received from Employer a release
in the form set forth in Attachment "3" hereto signed by Employer's
representative, as well as any Recipient Materials that are in his possession,
custody or control, including Recipient Materials retained by Executive in his
office or automobile or at his home. If any such information, documentation, or
material is stored on the Executive's personal computer or disk drive, this fact
should be disclosed to Employer within twenty-four (24) hours of signing this
Agreement so that an appropriate course of action may be taken. Executive shall
also return to the Employer his building and office access cards and keys.
8. Executive Cooperation. Executive agrees, both prior to and
subsequent to the execution of this Agreement, to comply with all reasonable
requests to provide information to Employer regarding matters relating to his
employment by Employer, or concerning which Executive would have particularized
knowledge, including, without limitation, assisting Employer in responding to
any inquiries, investigations, requests for information, or subpoenas by any
federal, state, or local government agency (further including, without
limitation, the Securities and Exchange Commission and the Nasdaq Stock Market,
Inc.).
9. Employment Inquiries. Employer agrees that Employer's Officers and
Senior Management shall be instructed that any and all inquiries by prospective
employers and their representatives concerning Executive's employment shall be
referred to Xxxxxxx Xxxxx.
10. Eligibility for Rehire. Executive acknowledges and agrees that, by
signing this Agreement, he is voluntarily giving up any right he may have to
maintain an association or employment with the current Employer or any affiliate
or subsidiary of Employer. Executive further agrees not to seek an association
or employment with, or to submit an application to, the current Employer or any
current affiliate or subsidiary of Employer at any time in the future. Executive
further agrees that this Agreement shall act as a complete bar to his
entitlement to any legal, equitable or administrative relief based upon any such
denial of employment.
11. Choice of Law and Venue. The Parties agree that the Agreement
shall be performed in Massachusetts, and that the laws of the Commonwealth of
Massachusetts shall govern the enforceability, interpretation and legal effect
of this Agreement. The Parties also agree that venue of any action to enforce
the provisions of this Agreement or any document executed in connection
herewith, or any action arising out of the employment relationship between
Employer and Executive, including an action concerning compensation, shall be in
the state or federal courts of the Commonwealth of Massachusetts.
12. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the Parties, and supersedes prior understandings
and agreements, if any, among or between the Parties with respect to the subject
matter hereof. There are no representations, agreements, arrangements or
understandings, oral or written, concerning the subject matter hereof between
and among the Parties that are not fully expressed or incorporated by reference
herein.
13. Amendments. Any modification of this Agreement or additional
obligation assumed by any Party in connection with this Agreement shall be
binding only if evidenced in writing signed by each Party or an authorized
representative of each Party. Additionally, this Agreement cannot be changed or
terminated orally, but may be changed only through written addendum executed by
all Parties. In the event that either party is required to notify the other in
this matter, the contact person for such notification is as follows:
Employer: Copy to:
Xxxxxx Brothers International Jenkens & Xxxxxxxxx, P.C.
One Broadgate 1445 Xxxx Avenue, Suite 3200
Xxxxxx XX0X 0XX Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxx Xxxxx Attn: Xx. Xxxx Xxxxxx
Tel: (000) 00-000-000-0000 Tel: (000) 000-0000
Fax: (000) 00-000-000-0000 Fax: (000) 000-0000
Email: Xxxxxx@xxxxxx.xxx Email: xxxxxxx@xxxxxxx.xxx
Executive: Copy to:
Xxxxxxx X. Xxxxxxxx Xxxxxxx Xxxxxx & Green, P.C.
0 Xxxxxx Xxxx 00 Xxxxx Xxxxxx
Xxxxxx, XX 00000-0000 Xxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxx
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Email: XXXxxxxxxx@xxx.xxx Email: Xxxxxxx@xxxxxx.xxx
14. Severability. The Parties acknowledge and understand that, if any
term of this Agreement shall be determined by a court to be illegal, invalid,
unconscionable or unenforceable, the remaining provisions will remain effective
and legally binding, and the illegal, invalid, unconscionable or unenforceable
term shall be deemed not to be a part of this Agreement.
15. Binding Effect. This Agreement and the terms, covenants,
conditions, provisions, obligations, undertakings, rights and benefits hereof
shall be binding upon, and shall inure to the benefit of, the Parties and their
respective heirs, executors, administrators, representatives, officers,
directors, shareholders, predecessors, successors, parents, subsidiaries,
affiliated entities, spouses, agents, attorneys, servants, Executives,
principals, partners, whether limited or general, and assigns, if any. Each of
the Parties represents and warrants that he or it has the authority to act on
his or its behalf and to bind him or it to this Agreement.
16. Disputes Relating to Agreement. If any action at law or in equity,
including an action for declaratory relief, is brought to enforce or interpret
the provisions of this Agreement, the party prevailing in any such litigation
shall recover from the adverse party its actual damages and reasonable costs and
expenses, including, without limitation, reasonable attorneys' fees incurred in
connection with such dispute and litigation. In the event of the violation or
threatened violation of any of the covenants and/or promises in this Agreement,
the non-breaching party shall be entitled to injunctive relief, both preliminary
and final, enjoining and restraining such violation or threatened violation,
which injunctive relief shall be in addition to all other remedies available to
the non-breaching party, at law or in equity.
17. Free Will. Executive and Employer acknowledge that each has had an
opportunity to consult with his or its respective attorneys or advisors
concerning the meaning, import, and legal significance of this Agreement, and
each has read this Agreement, as signified by their signatures hereto, and are
voluntarily executing same after advice of counsel or advisors for the purposes
and consideration herein expressed.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the Effective Date set forth above.
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxx
Date: January 29, 2001 ---------------------------------------
--------------------- Printed Name: XXXXXXX X. XXXXXXXX
AUTHORISZOR INC.:
Date: January 29, 2001 By: /s/ Xxxxx X. Xxxxxxx
------------------------------- ------------------------------------
Printed Name: Xxxxx X. Xxxxxxx
-----------------------
Title: Vice President and Secretary
------------------------------
Attachment "1"
Xxxxxxx X. Xxxxxxxx
0 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Home Off: (000) 000-0000 Res: (000) 000-0000
Cell Phone: (000) 000-0000 E-mail: XXXxxxxxxx@xxx.xxx
-------------------------------------------------------------------------------
January 31, 2001
Board of Directors
Authoriszor Inc.
Xxx Xxx xx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Dear Board of Directors:
In accordance with our recent discussions, I hereby submit and request that the
Board of Directors accept this as my Letter of Resignation as President, Chief
Executive Officer, and Interim Chief Financial Officer of Authoriszor Inc. In
addition, I request that the Board of Directors also accept my resignation as a
Director from all of Authoriszor Inc.'s affiliate and subsidiary companies
including Authoriszor Holdings Limited, Authoriszor U.S. Corporation, and
Authoriszor U.S. Holdings Corporation.
These resignations are effective as of January 31, 2001.
I would like to thank the Board and the Company for its support during my
employment with Authoriszor Inc., and wish the Board and the Company success in
its future.
Thank you.
Yours truly,
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Attachment "3"
January 30, 2001
Xx. Xxxxxxx X. Xxxxxxxx
0 Xxxxxx Xxxx
Xxxxxx, XX 00000-0000
Re: Confirmation and Release
Dear Xx. Xxxxxxxx:
This letter is to confirm that Xxxxxxx X. Xxxxxxxx has returned possession of
the 2000 Mercedes S500 company car to me as the authorised Authoriszor Inc.
representative designated by the Board of Directors to receive this car on
behalf of the Company.
Effective immediately, Authoriszor Inc. assumes all responsibility and liability
for this vehicle and hereby relieves Xxxxxxx X. Xxxxxxxx of any obligation or
responsibility for this vehicle. By February 15, 2001 Authoriszor Inc. will
formally confirm to Xxxxxxx X. Xxxxxxxx that this vehicle's Leasing company and
Insurance company have been formally notified to remove Xxxxxxx X. Xxxxxxxx as
the individual responsible for this vehicle.
Authoriszor Inc.
/s/ Xxxxx Xxxxxx Xxxxx Xxxxxx
------------------------- -------------------------
Signature Printed Name
January 30, 2001
-------------------------
Date
cc: Xxx Xxx
Xxxx Xxxxxx
