MUTUAL RELEASE AND INDEMNIFICATION AGREEMENT
Exhibit
10.6
This
Mutual Release and Indemnification Agreement (this “Agreement”) is made this
11th
day of
June, 2007, by and between Xxxxxx Xxxxxx (the “Executive”), a resident of the
State of Rhode Island, and Xxxxxxxx Technologies, Inc., and its subsidiaries
and
affiliates (collectively, the “Company”). The signatories to this Agreement will
be referred to jointly as the “Parties.”
Preamble
WHEREAS,
the
Executive served the Company as its Chief Executive Officer and Director;
and
WHEREAS,
in
conjunction with that agreement made between the Company and certain Investors
Aberdeen LLC et al, such agreement titled “Litigation Settlement, Securities
Purchase , Relinquishment and Exchange Agreement” (the “Purchase Agreement”),
the Executive has agreed to resign, effective not later than the 5th
Business
day following execution of such Agreement, his positions with the Company;
and
WHEREAS,
the
Parties wish to compromise and settle fully and finally any claims,
controversies or causes of action the Executive might have arising from his
employment or the cessation of his employment with the Company (the
“Settlement”);
NOW,
THEREFORE, in
reliance on the representations contained herein and in consideration of the
mutual promises, covenants and obligations contained herein, and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1.0 Settlement
1.1 In
consideration for tendering his resignation the Company and the Executive have
agreed to the following Settlement consideration for:
a)
Salary
Accrual/Contract Termination - The Company and the Executive are parties to
an
Employment Agreement dated as of May 12, 2004, as amended (the “Employment
Agreement”). Pursuant to the terms of the Employment Agreement, the Employee was
entitled to be paid an annual salary of $300,000 and a discretionary bonus
in an
amount determined by the Board of Directors of the Company. In addition, the
Employee was entitled to a series of stock grants over a four year period ending
January 2, 2008 and a severance payment equal to his salary for the lesser
of
three years or the then remaining term of the Employment Agreement in the event
that his employment was terminated following a change of control of the Company.
The Company has been unable to and has failed to pay the Executive his normal
salary for the past six months and as a consequence has incurred
an
obligation to the Executive for accrued salary in an amount equal to $150,000.
Pursuant to the terms of the Purchase Agreement, the Executive will be
relinquishing his ownership of the Company’s outstanding Series F Preferred
Stock and the “Investors” (as such term is defined in the Purchase Agreement)
will be purchasing shares of the Company’s newly created Series G Preferred
Stock, as a consequence of which a change of control of the Company could
be
deemed to have occurred. The Investors have conditioned their willingness
to
enter into the Purchase Agreement on a requirement that the Executive’s
employment with the Company be terminated and that the Executive resign as
an
officer and director of the Company thereby potentially imposing on the Company
a requirement that it pay severance to the Executive in an amount equal to
18
months of salary, such being the currently remaining term of the Employment
Agreement. Accordingly, the aggregate unpaid salary and severance of the
Executive against the Company may exceed $600,000. The Company and the Executive
agree to settle such claims for an amount equal to $325,000 and the remaining
balance is hereby forgiven by the Executive.
b)
Warwick
Office Lease Assumption- The Company presently has approximately four years
remaining on its lease for office and warehouse space at 000 Xxxxx Xxxxxx Xxxx,
Xxxxxxx XX and no longer needs to occupy such premises. The Company agrees
that
this lease obligation represents a potential liability in excess of $670,000.
The Executive has agreed to assume this lease obligation in consideration of
the
payment by the Company to him of $50,000. The Executive will enter into a Lease
Assumption and Indemnification Agreement with the Company whereby he shall
assume the lease and indemnify the Company from any and all future obligations
associated with the Lease.
1.2 The
Executive hereby agrees to terminate his service with the Company effective
the 5th
business
day after the Closing of the Purchase Agreement (the “Termination
Date”).
3.0 Confidentiality
and Non-Solicitation/Non-Competition
3.1 The
Executive acknowledges and recognizes the highly competitive nature of the
business of the Company and accordingly agrees that he will not at any time
use,
divulge or convey any secret or confidential information, knowledge or data
of
the Company, which he obtained during the course of his service with the Company
(except where required to do so by law).
4.0 Compromise
4.1 The
Parties agree and acknowledge that this Agreement is the result of a compromise
and shall never be construed as an admission by either Party of any liability,
wrongdoing, or responsibility on its part or on the part of its predecessors,
successors, assigns, agents, representatives, parents, subsidiaries, affiliates,
or their current or former officers, directors, employees, representatives,
or
attorneys.
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5.0 Release
5.1 The
Executive for himself and on behalf of all his attorneys, successors, assigns
and heirs hereby irrevocably and unconditionally releases, acquits, forever
discharges and covenants not to xxx the Company, its predecessors, successors,
subsidiaries, affiliates, assigns, agents, and any of their present or former
directors, officers, employees or shareholders, from any and all claims,
demands, damages or liability of any nature whatsoever prior to the date of
this
Agreement, known or unknown, which the Executive has or may have, including,
but
not limited to, claims arising under the Employee Retirement Income Security
Act
of 1974 (“ERISA”), claims for breach of contract or wrongful termination, claims
for equity awards, claims for severance or termination pay, claims for alleged
discrimination under federal, state or local law, including, but not limited
to,
Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e,
et
seq.,
the Age
Discrimination In Employment Act (“ADEA”), 29 U.S.C. § 621 et
seq.,
the
Americans With Disabilities Act, 42 U.S.C. § 12111, et
seq.,
and any
other federal, state, foreign or local laws, statutes, regulations, or
ordinances, as well as rights under any and all common law causes of action.
Consistent with the terms of this Paragraph, the Executive further agrees to
refrain from bringing, prosecuting or arbitrating any claim, demand or cause
of
action, either at law or in equity, against the Company as the result of any
act
or omission by the Company occurring from the beginning of time up to and
including the date of his execution of this Agreement.
5.2 The
Company for itself hereby releases and agrees not to xxx the Executive from
any
and all claims, demands, damages or liability of any nature whatsoever prior
to
the date of this Agreement, known or unknown, which it may have. Consistent
with
the terms of this Paragraph, the Company further agrees to refrain from
bringing, prosecuting or arbitrating any claim, demand or cause of action,
either at law or in equity, against the Executive as the result of any act
or
omission by the Executive occurring up to and including the date of his
execution of this Agreement.
5.3 Nothing
in this Agreement shall prevent any Party from asserting or pursuing any claim
to enforce the terms of this Agreement, the Purchase Agreement and each
document, instrument and agreement executed in connection with the Purchase
Agreement.
6.0 Indemnification
6.1 In
the
event that the Executive is made, or threatened to be made, a party to any
action or proceeding, whether civil or criminal, by reason of the fact that
the
Executive was a director, officer, employee, or member of a committee of the
Board or served any other corporation, partnership, joint venture, trust, the
Executive benefit plan or other enterprise in any capacity at the request of
the
Company, or resulting from any of the Executive’s actions in any of the
foregoing roles (a “Proceeding”)
the
Executive shall be indemnified by the Company and the Company shall advance
the
Executive’s related expenses to the fullest extent permitted by law (including
without limitation, damages, costs and reasonable attorney fees), as may
otherwise be provided in the Company’s Articles of Incorporation and By Laws as
incurred and will start prior to any judicial Proceeding, provided, however,
that the
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Executive
shall first pay an aggregate amount equal to $100,000 of any and all costs,
liabilities, claims and expenses hereafter incurred in connection with all
Proceedings (it being understood and agreed that such $100,000 payment
obligation is an aggregate obligation as to all Proceedings and not as to
any
one Proceeding). The Company further covenants not to amend or repeal any
provisions of the Articles of Incorporation or Bylaws of the Company in any
manner which would adversely affect the indemnification or exculpatory
provisions contained therein as they pertain to acts. The provisions of this
Section are intended to be for the benefit of, and shall be enforceable by,
each
indemnified party and the Executive’s heirs and representatives. If the Company
or any of its successors or assigns (i) shall consolidate with or merge into
any
other corporation or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) shall transfer
all
or substantially all of its properties and assets to such person, then and
in
each such case, proper provisions shall be made so that the successors and
assigns of the Company shall assume all of the obligations set forth in this
Section 6.1.
6.2 If
any
Proceeding shall be brought or asserted against the Executive, the Executive
shall promptly notify the Company in writing, and the Company shall assume
the
defense thereof, including the employment of counsel reasonably satisfactory
to
the Executive and the payment of all fees and expenses incurred in connection
with defense thereof; provided, that the failure of the Executive to give such
notice shall not relieve the Company of its obligations or liabilities pursuant
to this Section 6, except (and only) to the extent that such failure shall
have
prejudiced the Company.
The
Executive shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Executive unless: (1) the Company has
agreed in writing to pay such fees and expenses; or (2) the Company shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to the Executive in any such Proceeding; or (3) the
named parties to any such Proceeding (including any impleaded parties) include
both the Executive and the Company, and the Executive shall have been advised
by
counsel that a material conflict of interest is likely to exist if the same
counsel were to represent the Executive and the Company (in which case, if
the
Executive notifies the Company in writing that he elects to employ separate
counsel at the expense of the Company, the Company shall not have the right
to
assume the defense thereof and the reasonable expense of such counsel for the
Executive shall be at the expense of the Company). The Company shall not
be liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. The Company
shall not, without the prior written consent of the Executive, effect any
settlement of any pending Proceeding in respect of which the Executive is a
party, unless such settlement includes an unconditional release of the Executive
from all liability on claims that are the subject matter of such
Proceeding.
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Subject
to the terms of this Section 6, all fees and expenses of the Executive
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Executive, as incurred,
within thirty days of written notice thereof to the Company (regardless of
whether it is ultimately determined that the Executive is not entitled to
indemnification hereunder; provided, that the Company may require the Executive
to undertake to reimburse all such fees and expenses to the extent it is finally
judicially determined that the Executive is not entitled to indemnification
hereunder).
7.0 Non-disparagement
and Cooperation
7.1 The
Executive agrees that he will not make any disparaging statement or criticism
concerning, or take any action which is adverse to the interests of the Company,
its parents, assigns, predecessors, successors, or their current and former
representatives, agents, officers, directors, and employees; nor will the
Executive take any action that would cause them embarrassment or humiliation
or
otherwise cause or contribute to their being held in disrepute by the public
or
the Company’s clients, customers, employees, shareholders, agents, or
vendors.
The
Company agrees that it will not make any disparaging statement or criticism
concerning, or take any action which is adverse to the interests of the
Executive; nor will Company take any action that would cause the Executive
embarrassment or humiliation or otherwise cause or contribute to his being
held
in disrepute by the public or the Company’s clients, potential employers,
customers, employees, shareholders, agents, or vendors.
7.2 For
the
first twelve months following the date of this Agreement, the Executive agrees
to respond to reasonable information requests when requested by the Company
about subjects or matters the Executive worked on or was responsible for during
his employment or consultancy as may be requested by the Company’s President and
Chief Executive Officer or his/her designee. The Executive further agrees to
cooperate fully with the Company to facilitate an orderly transition of his
job
responsibilities to a successor, and in connection with any claim, investigation
or litigation in which the Company deems that his cooperation is needed. Nothing
in this Agreement shall require the Executive to act in an unlawful manner.
The
Executive agrees that he shall not be entitled to further compensation for
any
services he performs pursuant to this cooperation clause, however, to the extent
that the Company requests the Executive’s cooperation, the Company shall
reimburse the Executive for his reasonable expenses consistent with the
Company’s expense reimbursement policy in effect at the time.
8.0 Miscellaneous
8.1 This
Agreement is binding not only on the Parties themselves, but also on their
successors, assigns, heirs, agents and personal representatives. The rights
under this Agreement may not be assigned by either Party without the consent
of
the other Party.
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8.2 This
Agreement, along with any exhibits, constitutes the complete agreement between,
and contains all of the promises and undertakings of, the Parties. It may not
be
revised or modified without the mutual written consent of the
Parties.
8.3 The
Executive acknowledges and agrees that he has had sufficient time to consider
this Agreement and to seek legal advice concerning its meaning.
8.4 This
Agreement shall in all respects be interpreted, enforced, and governed under
the
laws of the State of Rhode Island, without regard to its conflict of law
provisions.
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of page intentionally left blank]
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WHEREFORE,
having
fully read and understood the terms of this Agreement, the Parties sign their
names below with the intention that they shall be bound by it.
XXXXXXXX
TECHNOLOGIES, INC.
| By: /s/ Xxxx Xxxxxxx | /s/ Xxxxxx Xxxxxx |
|
Name: Xxxx
Xxxxxxx
Title: Chief
Financial Officer
|
Xxxxxx Xxxxxx |
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