Exhibit 99.2
January 10, 2006
Xx. Xxx Xxxxxxxxx
0000 Xxxx Xxxx Xxxxxxx
Xxxx Xxxx Xxxxx, Xxxxx 00000
Dear Xxx;
The purpose of this document is to set forth the terms which you and MDI, Inc.,
its affiliates and subsidiaries (the "Company") have agreed upon regarding your
separation as an employee of the Company.
1. Resignation from Employment and Title - Pursuant to your resignation
given to the Company on Friday, January 6, 2006, your employment with the
Company shall terminate and you shall cease to be the Senior Vice President,
Chief Financial Officer, Treasurer and Assistant Secretary of the Company,
effective as of January 6, 2006, ("Date of Separation"). You shall also cease to
hold any other office or title with the Company and any of its affiliates or
operating units as of that date. At the request of the Company, you agree to
execute in the future appropriate resignation letter(s) from any such positions
should the Company need to formally handle your resignation(s). The records of
the Company, including your personnel file, shall reflect that your resignation
was a voluntary act on your part, that you left the Company in good standing and
that you are "eligible for rehire". If requested by you, the Company will
provide such information to your prospective employers.
The Company shall reflect in future public statements, if any, and any
future Securities & Exchange Commission ("SEC") and Nasdaq filings, that your
separation from the Company was a voluntary act on your part. Other than as
required by the SEC and Nasdaq, the Company has no intention to issue a press
release or make any other public announcement or statement concerning your
separation from employment with the Company or your resignation as the Chief
Financial Officer of the Company. Should it be required, or deemed necessary by
the Company, to make a statement or announcement, you will be given advance
notice and you will be provided the proposed text. Your agreement, however, will
not be sought nor required prior to making an announcement or statement. The
Company will make a general announcement to its employees concerning your
resignation. You agree to confirm to the Company's independent auditors, the SEC
and Nasdaq, if requested or required, that your resignation was not related to
the Company's accounting practices or financial statement disclosures.
2. Stock Options - As set forth in the letter from the Company to you dated
September 23, 2005, all stock options that have been granted to you under the
Company's option plans are fully vested and exercisable according to their
terms. On November 29, 2005 you exercised your right to purchase 20,000 shares
under option. Accordingly, you have 226,500 vested and unexercised shares under
option, as summarized below:
130,000 shares with a strike price of $ 0.77, to expire on 1/13/2015,
75,000 shares with a strike price of $1.23, to expire on 3/1/2014,
16,000 shares with a strike price of $1.21, to expire on 7/18/2013,
5,500 shares with a strike price of $1.49, to expire on 1/14/2012.
3. Severance Compensation - The Company agrees to pay to you, in
satisfaction of any and all claims you may have against the Company, now or in
the future, in the nature of a severance benefit, termination payment or any
other benefit, (a) on January 20, 2006 in the next scheduled payroll, a lump sum
payment of $37,500.00, from which the Company will first make standard tax
withholdings, and (b) salary continuation for a period of three (3) months
beginning January 20, 2006 (the "Severance Period"), at your annual base salary
at the current annual rate of $150,000.00 by direct deposit/mail every two (2)
weeks, subject to standard withholdings. You and the Company each agree that the
March 19, 2004 Employment Letter between us ("Employment Letter") is terminated
and that the provisions and payments provided for herein are in complete
satisfaction of each and every term and condition of the Employment Letter.
Notwithstanding the above to the contrary, any stock options that were granted
to you pursuant to the terms of the Employment Letter, are fully vested, remain
in full force and effect and are governed in accordance with the terms of the
agreements under which they were granted to you. Except for the above, you
further agree that there exists no other document and/or Company practice which
would provide to you or entitle you to receive a benefit not specifically
provided for herein. You will not receive nor be entitled to receive any annual
cash incentive compensation, bonus or additional stock options (for years 2005
or after) as addressed in the Employment Letter or under any Company Management
Incentive Plan or any other plan or practice of the Company.
4. Health and Medical Coverage - During the Severance Period, you shall
continue to be provided coverage by existing health/medical and dental (not,
however, any disability insurance) programs currently in effect and provided by
the Company, subject to direct payment of the employee portion of premiums
through continued payroll deductions. Once you are no longer being paid
severance, you may continue COBRA coverage by paying the Company the full cost
of this coverage for the remainder of the eligibility period.
5. PTO - Through January 6, 2006 you have accrued 94.68 hours of Paid Time
Off ("PTO"), which is equivalent to $6,827.49 as based on your current annual
base salary. This amount, less standard deductions, will be included in your
January 20, 2006 paycheck.
6. 401K - The Company will provide to you a form by which you may elect to
withdraw your vested account balance. If you elect to withdraw your funds,
please contact Human Resources to provide you with the proper forms.
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7. Supplemental Life Insurance-Your supplemental life insurance (as well as
your company provided life insurance) will continue for so long as you are being
paid severance. Your premiums for the coverage will be deducted from your
severance payments.
8. Company Provided Credit Cards, etc.- All items belonging to the Company,
including Company credit cards, car phone, office equipment (other than the
personal laptop computer with installed software, which you may keep) and other
Company items will be returned to the Company by Tuesday, January 10, 2006.
9. Expenses - You will be reimbursed for any Company approved and
authorized outstanding expenses incurred on behalf of the Company prior to the
Date of Separation. You should submit an expense reimbursement request in the
same or similar form as attached within five (5) days from receipt of this
letter.
10. Confidential Information - On or before January 10, 2006, you will
surrender to the Company all confidential information and all copies thereof, in
whatever form, in your possession or control, as well as all other papers,
documents, or property of the Company in your possession in whatever form. You
further agree and covenant never to use the Company's confidential information
in any business, commercial or other activity he may engage in or in any way
participate in after the Separation Date.
11. Release by You - For and in consideration of the sums to be paid by the
Company to you, as set forth above, in full satisfaction of any and all claims
of whatever nature, you release and forever discharge and by these presence do
for yourself, and your heirs, executors, and administrators and assigns, release
and forever discharge the Company, and its successors and assigns, of and from
all manner of actions, suits, debts, dues, sums of money, accounts, reckoning,
covenants, contracts, agreements, promises, claims and awards whatsoever, in law
or in equity which against the Company, you ever had, now have or which you or
your heirs, executors or administrators, hereafter can, shall or may have for,
upon or by reason of any matter, cause or thing whatsoever from the beginning of
the employment relationship with the Company.
You specifically acknowledge and understand that you are, by executing this
Agreement, waiving any and all rights or claims you may have arising out of your
employment with the Company, including any EEOC Charges against the Company, its
successors and assigns, and any respective officers, agents, employees and their
heirs, executors, administrators, successors and assigns together with any and
all persons, firms, corporations, affiliates and subsidiaries, who are or may be
liable for any and all claims, demands, judgments, damages, expenses, attorney's
fees, actions and causes of action which you now have arising out of or in
connection with any and all damages, expenses, claims, actions or causes of
action, including, but not limited to, alleged wrongful termination or
discriminatory treatment by the Company.
12. Release by Company - The Company hereto releases and forever discharges
you from any and all manner of action or actions, cause or causes of action, in
law or equity, and all suits, debts, liens, contracts, agreements, promises,
liabilities, claims, demands, damages, losses, costs, or expenses, which it now
has or hereafter may have against you arising out of or in connection with any
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matter, cause, or thing whatsoever incurred, done, omitted, or suffered to be
done prior to the date of this Agreement. The Company acknowledges and agrees
that, without limiting the foregoing, this release covers and includes all
claims of every kind and nature, past, present and future, known or unknown,
suspected or unsuspected.
13. Confidentiality of Release Provisions - It is expressly agreed by all
of the parties, and their directors, officers, employees, attorneys, agents, and
all other persons acting at their direction or on their behalf, that the
existence and the terms of this Agreement shall remain confidential including,
but not limited to, the specific amount of the settlement proceeds being paid
and any estimation or description of the amounts paid in settlement, except as
expressly required by law, the reporting requirements of the I.R.S. or the U.S.
Securities and Exchange Commission, The Nasdaq, or pursuant to valid court order
or other legal process. Notwithstanding the foregoing, each party may disclose
information regarding the Agreement to its own attorneys, accountants, agents or
tax advisors as necessary for business purposes, if the disclosing party advises
the recipient of the confidential nature of such information.
14. No Further Payments. It is the specific intent of the parties to this
Agreement that neither MDI, nor any of its affiliates, shall hereafter be
required to pay no further amounts to you, or to issue any further options to
purchase stock or provide any other consideration, for any claims, potential
claims, losses, damages, demands, potential litigation and disputes between the
parties that arise out of, relate to or in any way concern your previous
employment with MDI.
15. No Reliance on Any Undocumented Promises - No party to this Agreement
has made any statements, representations or promises to the other parties,
whether in writing or otherwise, or offered any other type of promise,
consideration or inducement that is not specifically set forth in this
Agreement. In this regard, all parties represent and warrant that, in entering
into this Agreement, they are each relying solely and exclusively on the
statements that are expressly set forth in this Agreement, and that they are
under no duress, coercion or pressure from any source.
16. Independent Judgment. You and MDI are each relying on their own
independent business judgment in deciding to enter into this Agreement. Further,
the parties have each received, and are relying and acting upon the advice of
their own legal counsel, who has reviewed the terms and language of this
Agreement with them and advised them of their legal rights relating to their
decision to settle and compromise their disputes, claims and potential claims,
causes of action, losses, damages and demands. Each of the parties understands
that this Agreement shall operate as a full, complete and final release and
settlement of any and all of their claims, as set forth above.
17. Severability - In the event that any of the provisions of this
Agreement shall be held to be invalid or unenforceable in whole or in part,
those provisions to the extent enforceable and all other provisions shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included in this Agreement. In the event that
any provision relating to the time period or scope of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or scope such court deems reasonable and enforceable, then the time period or
scope of restriction deemed reasonable and enforceable by the court shall become
and shall thereafter be the maximum time period.
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18. Governing Law; Attorneys Fees - THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED ACCORDING TO THE LAWS OF THE STATE OF TEXAS. ALL LEGAL ACTIONS ARISING
UNDER THIS AGREEMENT SHALL BE INSTITUTED IN, AND BOTH YOU AND MDI CONSENT TO
JURISDICTION IN, BEXAR COUNTY, TEXAS. IN THE EVENT OF ANY LITIGATION TO ENFORCE
THIS AGREEMENT, THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER ITS REASONABLE
LEGAL FEES, COURT COSTS AND EXPENSES.
19. Agreement, Read, Understood, and Fair - You and MDI has carefully read and
considered all provisions of this Agreement and agrees that all of the
restrictions set forth are fair and reasonable and are reasonably required for
the protection of the interests of you and MDI.
If the foregoing sets forth your understanding with respect to this matter, you
are asked to execute the attached duplicate original of this letter in the space
provided below and return it to the undersigned no later than January 10, 2006.
MDI, Inc.
/s/ X. Xxxxxxx Xxxxxx
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By: X. Xxxxxxx Xxxxxx
Its: President
Agreed to and accepted this 10th day of January, 2006.
/s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx
