SEPARATION AGREEMENT AND MUTUAL RELEASE
This Separation Agreement and Mutual Release ("Agreement") is made by and among
SURFNETMEDIA GROUP, INC., a Delaware corporation ("SurfNet"), SURFNET NEW MEDIA,
INC., an Arizona corporation (the "Subsidiary") and XXXXX X. XXXXXX ("Xxxxxx").
SurfNet and the Subsidiary are sometimes hereinafter referred to collectively as
the "Company." The Company and Xxxxxx are sometimes hereinafter referred to
collectively as the "Parties."
RECITAL:
X. Xxxxxx has been an employee and officer of the Company since July 2003
and has been a director of SurfNet since May 2002 and a director of the
Subsidiary since July 2003.
B. The Parties have mutually agreed to terminate their business
relationship, to release each other from any claims arising from or related to
this relationship and to enter into this Agreement.
In consideration of the mutual promises made herein and other valuable
consideration, receipt of which is hereby acknowledged, the Parties agree as
follows:
1. TERMINATION OF EMPLOYMENT; SERVICE ON BOARD OF DIRECTORS. Xxxxxx and the
Company acknowledge and agree that Xxxxxx'x employment as Chief Executive
Officer and President of the Company and service on the Board of Directors
of the Company terminated effective at the close of business on March 2,
2004 (the "Termination Date").
2. SEVERANCE BENEFIT. In consideration for the release of claims set forth
below and other obligations under this Agreement, and provided this
Agreement is signed by Xxxxxx and not revoked under Section 7 herein, and
further provided that Xxxxxx remains in full compliance with his
obligations to the Company under this Agreement, the Company will pay
Xxxxxx as a xxxxxxxxx benefit the payment of two thousand five hundred
dollars ($2,500.00) per month for an eight-month period (the "Severance
Period"). Each severance payment will be reduced by applicable tax
withholding and will be paid in accordance with the Company's regular
payroll schedule and practices. The first severance payment will be made on
the first regular payroll date following the Effective Date of this
Agreement (as defined in Section 18 below).
3. EMPLOYEE BENEFITS. Xxxxxx will not be entitled to participate in any of the
Company's benefit plans or programs offered to employees of the Company
after the Termination Date.
4. STOCK INTERESTS.
a. CERTIFICATE #1267. The Company acknowledges that Xxxxxx has full
right, title and interest in and to ten thousand (10,000) shares of
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the Company's restricted common stock represented by Certificate #1267
issued to him on June 11, 2003.
b. CERTIFICATE #1352. In addition to the stock described in Section 4.a.,
in consideration of Xxxxxx'x guaranty of a line of credit issued to
the Company by Wachovia Bank in September 2003 and the delivery of his
personal services to the Company from July 2003 through March 2004,
Xxxxxx will be entitled to retain one hundred forty thousand (140,000)
shares of the Company's restricted common stock out of three hundred
thousand (300,000) shares issued to him subject to substantial risk of
forfeiture pursuant to a Term Sheet dated July 15, 2003. Upon
execution hereof, Xxxxxx will surrender Certificate #1352 representing
the three hundred thousand (300,000) shares, whereupon the Company
will direct its transfer agent to issue a new certificate in lieu
thereof for one hundred forty thousand (140,000) shares (the "Vested
Shares"). The Vested Shares will have registration rights as provided
in the Registration Rights Agreement between Xxxxxx and the Company of
even date herewith attached hereto as Exhibit A.
5. NO OTHER PAYMENTS DUE. Xxxxxx agrees that the Company paid to Xxxxxx on or
before the Termination Date his accrued salary, accrued vacation and other
sums as were then due to Xxxxxx through such date. By executing this
Agreement, Xxxxxx hereby acknowledges receipt of all such payments.
6. RELEASE OF CLAIMS. In consideration for the obligations of both Parties set
forth in this Agreement, Xxxxxx and the Company, on behalf of themselves,
and their respective heirs, executors, officers, directors, employees,
investors, stockholders, administrators and assigns, hereby fully and
forever release each other and their respective heirs, executors, officers,
directors, employees, investors, stockholders, administrators, predecessor
and successor corporations and assigns, of and from any claim, duty,
obligation or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that any of them may
possess arising from any omissions, acts or facts that have occurred up
until and including the date of this Agreement including, without
limitation:
(1) any and all claims relating to or arising from Xxxxxx'x
employment and directorship relationships with the Company and
the termination of those relationships;
(2) any and all claims relating to, or arising from, Xxxxxx'x right
to purchase, or actual purchase of shares of stock of the
Company;
(3) any and all claims for wrongful discharge of employment; breach
of contract, both express and implied; breach of a covenant of
good faith and fair dealing, both express and implied, negligent
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or intentional infliction of emotional distress; negligent or
intentional misrepresentation; negligent or intentional
interference with contract or prospective economic advantage;
negligence; and defamation;
(4) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of
the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Age Discrimination in Employment Act of 1967, the federal and
state family leave acts, the Older Workers' Benefit Protection
Act and the Americans with Disabilities Act of 1990;
(5) any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and
(6) any and all claims for attorneys' fees and costs.
The Company and Xxxxxx agree that the release set forth in this
Section 6 will be and remain in effect in all respects as a complete
general release as to the matters released. This release does not
extend to any obligations incurred or specified under this Agreement.
7. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER ADEA. Xxxxxx acknowledges that he
is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Xxxxxx and the Company agree that this
waiver and release does not apply to any rights or claims that may arise
under ADEA after the date of this Agreement. Xxxxxx acknowledges that the
consideration given for this waiver and release Agreement is in addition to
anything of value to which Xxxxxx was already entitled. Xxxxxx further
acknowledges that he has been advised by this writing that (a) he should
consult with an attorney prior to executing this Agreement; (b) he has at
least twenty-one (21) days within which to consider this Agreement; (c) he
has seven (7) days following his execution of this Agreement to revoke the
Agreement (the "Revocation Period"). This Agreement will not be effective
until the Revocation Period has expired.
8. OTHER CLAIMS. The Parties represent that they are not aware of any claim by
either of them other than the claims that are released by this Agreement.
9. OTHER COVENANTS.
a. LINE OF CREDIT. The Company acknowledges and agrees to (i) indemnify
and hold Xxxxxx harmless from all liabilities relating to the $70,000
revolving, business line of credit, as well as a $6,000 business
credit card line, from Xxxxx Fargo Bank, N.A. secured by Xxxxxx'x
personal guarantee; and (ii) pay all installment obligations
thereunder in a prompt and timely fashion so as to preserve Xxxxxx'x
credit rating.
b. CONFIDENTIAL INFORMATION. Xxxxxx understands and agrees that his
obligations to the Company under the Nondisclosure Agreement between
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Xxxxxx and the Company of even date herewith, a copy of which is
attached hereto as Exhibit B, survive the termination of his
relationship with the Company under this Agreement. Xxxxxx agrees that
at all times hereafter he will continue to maintain the
confidentiality of all confidential and proprietary information of the
Company as provided by the Nondisclosure Agreement and that he will
not intentionally divulge, furnish or make available to any party any
confidential and proprietary information of the Company, until after
such time as such information has become publicly known otherwise than
by act of collusion of Xxxxxx.
c. CONFIDENTIALITY OF THIS AGREEMENT. The Parties each agree to use their
best efforts to maintain in confidence the existence of this
Agreement, the contents and terms of this Agreement, and the
consideration for this Agreement (hereinafter collectively referred to
as "Separation Information"). Each Party will take every reasonable
precaution to prevent disclosure of any Separation Information to
third parties, except as may be or has been disclosed in a press
release and except for disclosures required by law or necessary to
effectuate the terms of this Agreement. Xxxxxx understands and
acknowledges that Company may be required to file a copy of this
Agreement with the Securities and Exchange Commission and to disclose
its terms in Company's next proxy statement. The Parties agree to take
every precaution to disclose Separation Information only to those
employees, officers, directors, attorneys, accountants, governmental
entities, and family members who have a reasonable need to know of
such Separation Information.
d. SEC REPORTING. Xxxxxx will cooperate with the Company in providing
information with respect to all reports required to be filed by the
Company with the Securities and Exchange Commission as they relate to
required information with respect to Xxxxxx.
e. NONCOMPETITION. During the period from the Termination Date through
the end of the Severance Period, Xxxxxx agrees that he will not engage
in any employment, consulting or business relationship with any
company that is in competition with the Company.
f. NON-DISPARAGEMENT. Each Party will refrain from any disparagement,
defamation, slander of the other, or tortious interference with the
contracts and relationships of the other.
g. BREACH OF THIS AGREEMENT. Xxxxxx acknowledges that upon material
breach of any provision of this Agreement, the Company would sustain
irreparable harm from such breach, and, therefore, Xxxxxx agrees that
in addition to any other remedies which the Company may have for any
breach of this Agreement or otherwise, including termination of the
Company's obligations to provide the salary, benefits and stock
vesting to Xxxxxx as described in Sections 2, 3 and 4 of this
Agreement, the Company will be entitled to obtain equitable relief
including specific performance, injunctions and restraining Xxxxxx
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from committing or continuing any such violation of this Agreement.
Xxxxxx further agrees that if the Company ceases such payments and
benefits as a result of Xxxxxx'x breach of this Agreement, the waiver
and release set forth in this Agreement will remain in full force and
effect at all times in the future.
10. AUTHORITY. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all
who may claim through it to the terms and conditions of this Agreement.
Xxxxxx represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement. Each Party warrants and represents
that there are no liens or claims of lien or assignments in law or equity
or otherwise of or against any of the claims or causes of action released
herein.
11. NO REPRESENTATIONS. Neither Party has relied upon any representations or
statements made by the other Party which are not specifically set forth in
this Agreement.
12. SEVERABILITY. If any provision hereof becomes or is declared by a court or
other tribunal of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.
13. ARBITRATION. The Parties will attempt to settle all disputes arising in
connection with this Agreement through good faith consultation. If no
agreement can be reached on such dispute within fifteen (15) days after
notification in writing by either Party to the other concerning such
dispute, the dispute will be settled by binding arbitration to be conducted
in Maricopa County, Arizona before the American Arbitration Association.
The arbitration decision will be final, conclusive and binding on both
Parties and any arbitration award or decision may be entered in any court
having jurisdiction. The Parties agree that the prevailing party in any
arbitration will be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties further agree
that the prevailing Party in any such proceeding will be awarded reasonable
attorneys' fees and costs. This Section 13 will not apply to the
Nondisclosure Agreement. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE
TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS.
14. ENTIRE AGREEMENT. This Agreement, and the exhibits hereto, represent the
entire agreement and understanding between the Company and Xxxxxx
concerning Xxxxxx'x separation from the Company, and supersede and replace
any and all prior agreements and understandings concerning Xxxxxx'x
relationship with the Company and his compensation by the Company.
15. NO ORAL MODIFICATION. This Agreement may only be amended in writing signed
by Xxxxxx and the Company.
16. GOVERNING LAW. This Agreement will be governed by the laws of the State of
Arizona, without regard to its conflicts of law provisions.
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17. EFFECTIVE DATE. This Agreement is effective upon the expiration of the
Revocation Period described in Section 7 and such date is referred to
herein as the "EFFECTIVE DATE."
18. COUNTERPARTS. This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.
19. ASSIGNMENT. This Agreement may not be assigned by Xxxxxx or the Company
without the prior written consent of the other party. Notwithstanding the
foregoing, this Agreement may be assigned by the Company to a corporation
controlling, controlled by or under common control with the Company without
the consent of Xxxxxx.
20. VOLUNTARY EXECUTION OF AGREEMENT. This Agreement is executed voluntarily
and without any duress or undue influence on the part or behalf of the
Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:
(1) they have read this Agreement;
(2) they have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of their own choice
or that they have voluntarily declined to seek such counsel;
(3) they understand the terms and consequences of this Agreement and
of the releases it contains; and
(4) they are fully aware of the legal and binding effect of this
Agreement.
IN WITNESS WHEREOF, the Parties have executed this Separation Agreement and
Mutual Release on the respective dates set forth below.
SurfNet:
SURFNET MEDIA GROUP, INC.
/s/ Xxxxxx X. Xxxxx
By: Xxxxxx X. Xxxxx
Chairman
Dated: April 20, 2004
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Subsidiary:
SURFNET NEW MEDIA, INC.
/s/ Xxxxxx X. Xxxxx
By: Xxxxxx X. Xxxxx
Chairman
Dated: April 20, 2004
Xxxxxx:
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Dated: April 20, 2004
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