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EXHIBIT 10.1
CONFIDENTIAL SEPARATION AGREEMENT
AND
GENERAL RELEASE
This Confidential Separation Agreement and General Release ("Agreement") is
entered into as of January 18, 2000, between XXXXXXX COMPUTER SERVICES, INC.
("Xxxxxxx") and XXXXXX X. XXXXXX ("Xxxxxx"). The purpose of this Agreement is to
acknowledge and clarify the understandings and agreements of the parties
relating to Xxxxxx'x separation from service with Xxxxxxx.
1. Termination of Employment. Xxxxxx shall resign from all offices,
directorships and fiduciary positions with Xxxxxxx, its affiliates and their
respective benefit plans, including, without limitation, from the positions of
Chairman and Chief Executive Officer of Xxxxxxx and as a member of Xxxxxxx'x
Board of Directors, effective as of January 18, 2000 (hereinafter referred to as
the "Termination Date"). Xxxxxx'x employment with Xxxxxxx shall terminate as of
such date. The parties acknowledge and agree that such resignation by Xxxxxx
shall be deemed to be with Good Reason within the meaning of Paragraph 10(b) of
the Employment Agreement entered into between the parties as of July 1, 1997
(the "Employment Agreement"). Xxxxxxx hereby waives notice of that resignation.
The parties further acknowledge and agree that the Termination Date hereunder
shall constitute the Termination Date for purposes of the Employment Agreement.
2. Obligations of the Parties Under the Employment Agreement, Including
Xxxxxxx'x Obligations Under Paragraph 10(b) Thereof. The parties acknowledge
their respective obligations under the Employment Agreement, including, without
limitation, Xxxxxxx'x obligations under Paragraph 10(b) thereof. With regard to
Paragraphs 10(b)(i) and 10(b)(ii) of the Employment Agreement, on January 25,
2000 (being the date determined under Paragraph 15 hereof) (the "Initial Payment
Date"), Xxxxxxx shall make payment of the Accrued Obligations as defined in the
Employment Agreement (including, but not limited to, accrued vacation pay) and
Xxxxxxx shall make payment of a prorated cash bonus for the fiscal year ending
in 2000 in the amount of $180,000 (being six-twelfths of a target bonus of 60%
of Xxxxxx'x base compensation). As regards Paragraph 10(b)(iii) of the
Employment Agreement, the parties agree that in lieu of any payments to which
Xxxxxx would otherwise be entitled thereunder, Xxxxxxx shall pay Xxxxxx in a
single lump sum on the Initial Payment Date, the amount of $1,920,000. Under
Paragraph 10(b)(iv) of the Employment Agreement, Xxxxxxx shall continue to
provide benefits to Xxxxxx for a period of two (2) years after the Termination
Date, as provided in said Paragraph 10(b)(iv), including, without limitation,
health benefits under Xxxxxxx'x group health plan. At the termination of said
two-year period, Xxxxxx shall be offered the opportunity to elect continuation
coverage under Xxxxxxx'x group health plan in accordance with Internal Revenue
Code ("Code") Section 4980B(f), as it or a successor Code section may exist at
such time. With respect to Paragraph 10(b)(vi) of the Employment Agreement,
Xxxxxx agrees to waive his rights to outplacement services thereunder and
Xxxxxxx agrees to pay him in lieu thereof $50,000, which Xxxxxxx shall pay to
Xxxxxx on the Initial Payment Date.
3. Uninsured Medical Expenses. In connection with the benefits to which
Xxxxxx is entitled under Paragraph 7(b) of the Employment Agreement (relating to
uninsured Medical
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Expenses), the parties acknowledge and agree that, as of the Termination Date,
Xxxxxx is age 55 and, therefore, the reimbursement or payment of medical
expenses on behalf of Xxxxxx and/or his spouse under said Paragraph 7(b) shall
be limited to an aggregate of $150,000, exclusive of the benefits referred to in
the fourth sentence of Paragraph 2.
4. Supplemental Retirement Benefit. With respect to Paragraph 7(c) of the
Employment Agreement (relating to Supplemental Retirement Benefit), the parties
further acknowledge and agree that Xxxxxx'x Supplemental Retirement Percentage
shall be 27.5%. Such benefits shall be paid not less frequently than monthly in
accordance with Xxxxxxx'x customary practices; and shall not be reduced by
monthly Social Security Retirement benefits prior to Xxxxxx'x Social Security
retirement age.
5. Equity Compensation. Xxxxxxx shall pay any amounts to Xxxxxx to which he
is entitled under Xxxxxxx'x phantom stock plan in accordance with its terms,
based on the price of Xxxxxxx'x stock on January 14, 2000, which the parties
agree was $16.25 per share, with the number of shares of phantom stock held by
Xxxxxx to be determined as of the date hereof. Similarly, Xxxxxx shall be
entitled to exercise any stock options in accordance with the terms of any
Xxxxxxx stock option plan in which he participates, any applicable award
agreement under such a plan, and the Employment Agreement, with the number of
shares which are subject to such options, and the respective exercise prices, to
be as determined by further written agreement of Xxxxxx and Xxxxxxx based upon
their customary records as to stock option awards previously made to Xxxxxx;
provided that, with respect to any and all stock options which are exercisable
and have exercise prices less than $13.00 per share, Xxxxxx shall, in return for
cancellation of all such options on the Termination Date, receive on the Initial
Payment Date a lump sum cash payment from Xxxxxxx equal to the excess of (a) the
aggregate amount of $16.25 per share over (b) the aggregate exercise price for
the option, as reflected on the records of Xxxxxxx relating to the stock options
as previously reported by Xxxxxxx to Xxxxxx; and all of Xxxxxx'x other options,
all of which shall be vested as of the Termination Date pursuant to the
Employment Agreement, shall be exercisable for a period of two years after the
Termination Date.
6. Public Announcements and Non-Disparagement. Xxxxxx and Xxxxxxx shall
mutually agree upon the content of any voluntary statements, whether oral or
written, to be made by Xxxxxx or Xxxxxxx to any third party or parties regarding
Xxxxxx'x termination of employment, including, without limitation, any press
release or other statements to the press, except that this Paragraph 6 shall not
apply to any statements required to be made by reason of law, regulation, or any
judicial or other similar proceeding or order. Xxxxxx and Xxxxxxx each hereby
covenant and agree not to make any public or private statements to any third
party, including, without limitation, to any representative of any news
organization, regarding the other party hereto that are intended to, or can
reasonably be expected to, cause such other party's reputation to be damaged in
any material respect.
7. Payment of Certain Expenses. In addition to any rights which Xxxxxx may
have under Paragraph 13 of the Employment Agreement, Xxxxxxx agrees to reimburse
Xxxxxx for reasonable attorney fees incurred in connection with the preparation
of this Agreement and the
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Consulting Agreement between Xxxxxx and Xxxxxxx of even date hereof, subject to
a limit of $15,000.
8. Confidentiality, Records and Nonsolicitation. In addition to his
covenants under Paragraph 8 of the Employment Agreement (relating to
Confidentiality, Records, Nonsolicitation and Enforcement), Xxxxxx further
covenants and agrees that he shall not disclose or discuss, other than with
legal counsel, personal tax or financial advisors, or members of Xxxxxx'x
immediate family, either the existence of or any details of this Agreement,
except that which Xxxxxxx publicly discloses. Xxxxxx further agrees that,
insofar as he discusses the circumstances of his termination of employment with
anyone other than those parties listed in the previous sentence, he will state
only that he voluntarily retired and that he has agreed with Xxxxxxx not to make
any further comment. To the extent Xxxxxx discusses the existence or terms of
this Agreement with any third party as authorized above, Xxxxxx shall inform
such third party of the obligation to maintain confidentiality of all
communications concerning this Agreement and take reasonable and appropriate
efforts to assure such continued confidentiality.
9. Limitations on Compensation and Benefits. Xxxxxx'x benefits under the
Xxxxxxx deferred income (capital accumulation) plan shall be paid in accordance
with and in the amounts due under the terms of such plan (i.e., in a single sum
annually no later than January 15 of each relevant year). Except as specifically
provided in the Employment Agreement, as modified, supplemented or liquidated by
this Agreement, or in this Agreement, and except as specifically provided by
Xxxxxxx'x customary practice for payment of accrued Board of Director's fees,
Xxxxxx hereby waives any and all claims to salary, incentives, payments, or
benefits of any kind.
10. Mutual Release of Claims.
(a) Xxxxxx'x Release. Except as to the benefits expressly made
available to Xxxxxx hereunder and any accrued vested benefits available to
Xxxxxx under the express terms and conditions of any employee benefit plan
maintained by Xxxxxxx or any of its subsidiaries or affiliates, Xxxxxx, as his
free and voluntary act and on behalf of himself, his heirs, administrators,
executors, successors and assigns, hereby releases and discharges Xxxxxxx, its
subsidiaries and affiliates and the directors, officers, employees, and agents
of each of them, of and from any and all debts, obligations, claims, demands,
judgments or causes of action of any kind whatsoever in tort, contract, by
statute, or on any other basis for compensatory, punitive or other damages,
expenses, reimbursements or costs of any kind, including but not limited to any
and all claims, demands, rights, and/or causes of action arising out of
allegations relating to a claimed breach of an alleged oral or written contract,
or relating to purported employment discrimination or civil rights violations
(such as, but not limited to, those arising under Title VII of the Civil Rights
Act of 1964 (42 U.S.C. Section 2000e, et seq), the Civil Rights Acts of 1866 and
1871 (42 U.S.C. Sections 1981 and 1983), the Age Discrimination in Employment
Act of 1967 (29 U.S.C. Section 621, et seq.), the Equal Pay Act of 1963 (29
U.S.C. Section 201 et seq.), the Family and Medical Leave Act (29 U.S.C. Section
2691 et seq.), the Americans With Disabilities Act (42 U.S.C. Section 12,101 et
seq.), the Employee Retirement Income Security Act (29 U.S.C. Section 1001 et
seq.), the Illinois Human Rights Act (775 ILCS 5-101 et seq.),
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the Illinois Wage payment and Collection Act (820 ILCS 115/1 et seq.), or any
other applicable federal, state or local law, regulation, ordinance or order)
which he might have or assert against any of said entities or persons (1) by
reason of his active employment by Xxxxxxx or the termination of said employment
relationship and all circumstances related thereto, or (2) by reason of any
other matter, cause or thing whatsoever, from the beginning of time to the date
of execution of this Agreement; provided, however, that this Agreement shall not
limit or impair Xxxxxx'x right as a former officer and director of Xxxxxxx to
indemnification by Xxxxxxx to the full extent provided, by the corporate
governing documents or any employee benefit plan of Xxxxxxx or under any
director and officer liability insurance policy maintained by Xxxxxxx, for any
incumbent or former officer or director of Xxxxxxx; and further provided,
however, that Xxxxxx does not release any rights under the Employment Agreement
(including, without limitation, Paragraph 13 thereof) as applicable to post Date
of Termination payments or benefits under the Employment Agreement, as modified,
supplemented or liquidated by this Agreement.
(b) Xxxxxxx'x Release. Xxxxxxx, on behalf of itself, any predecessors
in interest, whether or not incorporated, its shareholders (in their capacity as
such) and its successors and assigns does hereby irrevocably and unconditionally
release Xxxxxx and his estate, heirs, beneficiaries, executors, personal
representatives or other successors and assigns, from all claims, controversies,
liabilities, demands, causes of action, debts, obligations, promises, acts,
agreements, rights of contribution and/or indemnification, and damages of
whatever kind or nature, whether known or unknown, suspected or unsuspected,
foreseen or unforeseen, liquidated or contingent, actual or potential, joint or
individual, that it or they have had or now have, based on any and all aspects
of Xxxxxx'x employment with Xxxxxxx or his separation from employment with
Xxxxxxx, including but not limited to: all claims arising under the Employment
Agreement; any and all claims for breach of express or implied contracts or the
covenant of good faith and fair dealing (whether written or oral), and any and
all claims for breach of fiduciary duty, breach of promise, detrimental reliance
or tort, whether based on common law or otherwise and any and all claims that
may be asserted on Xxxxxxx'x behalf by its shareholders or any other third
party. The foregoing list is meant to be illustrative rather than inclusive.
Notwithstanding the foregoing, Xxxxxxx does not release any claims that may
hereafter arise.
11. Validity of Agreement. If any provision, or portion thereof, of this
Agreement is determined to be invalid under any applicable statute or rule of
law, only such provision, and only to the extent determined to be invalid, shall
be deemed omitted from this Agreement, the remainder of which shall remain fully
in force and effect.
12. Tax Withholding. All payments to Xxxxxx by Xxxxxxx under this Agreement
shall be subject to the withholding of any taxes required to be withheld by
federal, state, or local law with respect to any such payment.
13. Applicable Law. The construction, interpretation and performance of
this Agreement shall be governed by the laws of the State of Illinois without
regard to choice of laws principles.
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14. Headings. The headings of the paragraphs of this Agreement have been
included solely for convenience of reference and are not to be used in the
interpretation of the provisions of this Agreement.
15. OWBPA Rights. Xxxxxx understands that, pursuant to the Older Workers
Benefit Protection Act of 1990, he has the right to consult with an attorney
before signing this Agreement, he has twenty-one (21) days to consider this
Agreement before signing it and may revoke the Agreement within seven (7)
calendar days after signing it. Xxxxxx further understands that the Agreement
will not become effective or enforceable until the seven-day revocation period
has expired and that the benefits provided in this Agreement will not be
provided until such period has expired.
16. Entire Agreement. Subject to the terms of the Consulting Agreement
between Xxxxxx and Xxxxxxx of even date herewith, this Agreement constitutes the
entire agreement between Xxxxxxx and Xxxxxx with respect to the subject matter
hereof and shall not be amended, modified, or amplified without specific written
provision to that effect, signed by both parties. No oral statement of any
person whosoever shall, in any manner or degree, modify or otherwise affect the
terms and provisions of this Agreement.
17. Additional Representations. By signing this Agreement, Xxxxxx states
that:
(a) He has read it and has had sufficient time to consider its terms;
(b) He understands it and knows that he is giving up important rights;
(c) He agrees with everything in it;
(d) He is aware of his right to consult an attorney before signing it,
and has been so advised; and
(e) He has signed it knowingly and voluntarily.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
Attest: XXXXXXX COMPUTER SERVICES, INC.
By:
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Title:
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Witness: XXXXXX X. XXXXXX
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