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EXHIBIT 10.16
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") made as of the 3rd day of
November, 1998 by and between COMPUTER LEARNING CENTERS, INC., a Delaware
corporation (the "Company"), and XXXX X. XXXXX (the "Executive").
The Executive is presently employed by the Company as its President and
Chief Operating Officer.
The Board of Directors of the Company (the "Board") desires to set
forth the nature and amount of compensation and other benefits to be provided to
Executive and any of the rights of the Executive in the event of his termination
of employment with the Company. The Executive is willing to commit himself to
continue to serve the Company, on the terms and conditions herein provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into this Agreement under the terms and conditions set forth below.
Accordingly, in consideration of the promises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue to serve the Company, on
the terms and conditions set forth herein.
2. Term. The term of Executive's employment under Section 1 will
terminate upon the termination of Executive's employment with the Company for
any reason whatsoever. No such termination shall affect any of the Company's
other obligations under this Agreement arising at or after such termination of
employment.
3. Position and Duties. The Executive shall serve as President and
Chief Operating Officer of the Company and shall have such responsibilities and
authority as may normally be exercised by a president and chief operating
officer of a company.
4. Place of Performance. The Executive shall be based at the current
principal executive offices of the Company in Northern Virginia, or in the
Company's headquarters, provided that such headquarters is not more than
thirty-five (35) miles from the location of the Company's principal executive
offices on the date hereof.
5. Compensation and Related Matters.
(a) Base Salary. During the Executive's employment with the
Company, the Company shall pay to the Executive a salary at a rate of not less
than Two Hundred Fifteen Thousand Dollars ($215,000) per annum in equal
installments as nearly as practicable on the normal payroll periods for
employees of the Company generally (the "Base Salary"). The Base Salary may be
increased from time to time and, if so increased, shall not thereafter be
decreased during the term of this Agreement.
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(b) Bonus. The Executive shall be eligible to receive an annual
bonus (the "Annual Bonus") payable under the Company's bonus plan in accordance
with the bonus criteria established by the Board for the Executive on an annual
basis.
(c) Expenses. During the term of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in performing services
hereunder, including all expenses of travel and living expenses while away from
home on business or at the request of and in the service of the Company,
provided that such expenses are incurred and accounted for in accordance with
the policies and procedures established by the Company.
(d) Benefits. During the term of the Executive's employment
hereunder, the Company shall maintain in full force and effect, and the
Executive shall be entitled to continue to participate in, all of its employee
benefit plans and arrangements in effect on the date hereof in which the
Executive participates or receives benefits, or plans or arrangements providing
the Executive with at least equivalent benefits thereunder. The Company shall
not make any changes in such plans and arrangements which would adversely affect
the Executive's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all officers of the Company and does not
result in a proportionately greater reduction in the rights of or benefits to
the Executive as compared with any other officers of the Company. The Executive
shall be entitled to participate in or receive benefits under any employee
benefit plan or arrangement made available by the Company in the future to its
officers and key management employees subject to and on a basis consistent with
the terms, conditions and overall administration of such plans and arrangements.
Nothing paid to the Executive under any plan or arrangement presently in effect
or made available in the future shall be deemed to be in lieu of any amounts
payable to the Executive pursuant to this Section 5.
6. Termination and Definitions.
(a) Cause. This Agreement shall immediately be terminated and
neither party shall have any future obligation hereunder, except for the
Company's obligations in Section 7 hereof, and except for the Executive's
obligations in Section 8 hereof, if the Executive's employment is terminated for
Cause.
(b) Termination by the Executive. The Executive may terminate
his employment hereunder for Good Reason.
(c) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto.
(d) Definitions.
(i) For purposes of this Agreement, termination "for
Cause" shall arise where termination results from theft or dishonesty in the
conduct of the Company's
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business, or intoxication while on duty, or conviction of a felony, in each case
having a material adverse effect on the business of the Company.
(ii) For purposes of this Agreement, "Good Reason" shall mean
(A) a Change in Control of the Company (as defined below), (B) a decrease in the
total amount of the Executive's Base Salary below its level in effect on the
date hereof, (C) a reduction in the importance of the Executive's job
responsibilities without the Executive's consent or (D) a geographical
relocation of the Executive without his consent.
(iii) For purposes of this Agreement, a "Change in Control" of
the Company shall be deemed to have occurred if (A) any person (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) of more of the combined voting power of
the Company's then outstanding securities, (B) during any period of two (2)
consecutive years during the term of this Agreement, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two thirds of the directors then in office who
were directors at the beginning of the period, (C) the shareholders of the
Company approve a merger or consolidation involving the Company resulting in a
change of ownership of a majority of the outstanding shares of capital stock of
the Company, or (D) the shareholders of the Company approve a plan of
liquidation or dissolution of the Company or the sale or disposition by the
Company of all or substantially all of the Company's assets.
(iv) For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
7. Compensation upon Termination.
(a) Termination for Cause or Resignation Without Good Reason.
I f (i) the Executive's employment shall be terminated for Cause, or (ii) the
Executive voluntarily resigns from the employ of the Company and Good Reason
shall not have occurred, then the Company shall pay the Executive his Base
Salary through the date of delivery to him of a Notice of Termination at the
rate then in effect at the time and date the Notice of Termination is delivered,
and the Company shall have no further obligations to the Executive under this
Agreement.
(b) Termination Without Cause or Resignation for Good Reason.
If the Company shall terminate the Executive's employment other than pursuant to
Section 6(a) hereof (it being understood that a purported termination pursuant
to Section 6(a) hereof, which is disputed and finally determined not to have
been pursuant to Section 6(a) shall be a termination by the Company pursuant to
Section 6(b)), then:
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(i) the Company shall pay to the Executive (A) his Base Salary
through the date of termination at the rate in effect at the time Notice of
Termination is delivered, plus (B) his Annual Bonus pro-rated through the date
of termination; and
(ii) in lieu of any further salary or bonus payments
to the Executive for periods subsequent to the date of termination, the Company
shall pay on the date of termination, as severance pay to the Executive, a lump
sum payment in an amount equal to one and one half (1 1/2) times the Executive's
Base Salary in effect as of the date of termination.
(c) Termination Upon a Change in Control. If there is a Change
in Control of the Company or there has been a public announcement of a Change in
Control of the Company (provided, however, that consummation of the Change in
Control of the Company shall be a condition precedent to the effectiveness of
this provision) and at any time thereafter the employment of the Executive under
this Agreement is terminated other than pursuant to Section 6(a) hereof by the
Company or a successor entity, then:
(i) the Company shall pay to the Executive (A) his Base
Salary through the date of termination at the rate in effect at the time Notice
of Termination is given, plus (B) his Annual Bonus pro-rated through the date of
termination; and
(ii) in lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of termination, the Company shall
pay on the date of termination as severance pay to the Executive, a lump sum
payment in an amount equal to (A) two (2) times the Executive's Base Salary in
effect as of the date of termination plus (B) two (2) times the Annual Bonus
paid to the Executive in the prior fiscal year of the Company.
(d) Continuation of Benefit Plans. Upon any termination of the
Executive's employment other than pursuant to Section 6(a) hereof, the Company
shall maintain in full force and effect for the continued benefit of the
Executive for eighteen (18) months, or twenty-four (24) months if there has
previously occurred a Change in Control of the Company, all employee benefit
plans and programs in which the Executive was entitled to participate.
(e) Participation in Benefit Plans after Termination of
Employment. The Executive shall be entitled to continue to participate in any
benefit plan or program of the Company for twelve (12) months after the
expiration of the period provided for in 7(d), provided, that the Executive pays
the direct cost of any such benefit plan or program.
8. Covenants Not to Compete or Hire Employees. It is recognized and
understood by the parties hereto that Executive, through Executive's association
with the Company as an employee, shall acquire a considerable amount of
knowledge and goodwill with respect to the business of the Company, which
knowledge and goodwill are extremely valuable to the Company and which would be
extremely detrimental to the Company if used by Executive to compete with the
Company. It is, therefore, understood and agreed by the parties hereto that,
because of the nature of the business of the Company, it is necessary to afford
fair protection to the Company from such competition by Executive. Consequently,
as a material inducement to the Company to enter into this Agreement, Executive
covenants and agrees that for the
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period commencing with the date hereof and ending one (1) year after Executive's
termination of employment with the Company, Executive shall not engage,
directly, indirectly or in concert with any other person or entity, in the
information technology training industry in the geographical area of the
contiguous forty-eight (48) states of the United States. Executive further
covenants and agrees that for the period commencing on the date of Executive s
termination of employment for any reason whatsoever and ending one (1) year
after Executive's termination of employment with the Company, Executive shall
not, directly or indirectly, hire or engage or attempt to hire or engage any
individual who shall have been an employee of the Company at any time during the
one (1)-year period prior to the date of Executive's termination of employment
with the Company, whether for or on behalf of Executive or for any entity in
which Executive shall have a direct or indirect interest (or any subsidiary or
affiliate of any such entity), whether as a proprietor, partner, co-venturer,
financier, investor or stockholder, director, officer, employer, employee,
servant, agent, representative or otherwise.
9 Successors; Binding Agreement.
(a) Successors. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 9 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) Binding Agreement. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
10. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: Xxxx X. Xxxxx
13906 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
If to the Company: 00000 Xxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
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or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Prior Agreement. All prior agreements between the Company and the
Executive with respect to the employment of the Executive are hereby superseded
and terminated effective as of the date hereof and shall be without further
force or effect.
12. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and duly authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other hereto
of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Virginia.
13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
14. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators, in Washington, D.C., in
accordance with the rules of the American Arbitration Association then in
effect. The expense of such arbitration shall be borne by the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date and year first above written.
COMPUTER LEARNING CENTERS, INC.
Date: February 17, 1999 By: /S/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Chairman of the Board
EXECUTIVE:
Date: February 21, 1999 /S/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
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