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EXHIBIT 10.26
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") made as of the 18th day of
January, 2000 by and between COMPUTER LEARNING CENTERS, INC., a Delaware
corporation (the "Company"), and XXXX X. XXXXXX (the "Executive").
The Executive is accepting a new position with the Company as its
Chief Financial Offier.
The Executive and the Company are parties to a Severance Agreement
dated January 15, 1999 (the "Prior Severance Agreement").
The Executive and the Company agree to terminate the Prior Severance
Agreement and replace it with this Agreement.
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 Chief
Financial Officer of the Company and shall have such responsibilities and
authority as may normally be exercised by a chief financial 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 One Hundred Sixty-Five
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Thousand Dollars ($165,000) 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.
(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.
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(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 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. If (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
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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:
(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 (1) 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) one and one half (1
1/2) times the Executive's Base Salary in effect as of the date of termination
plus (B) one and one half (1 1/2) times the Annual Bonus paid to the Executive
in the prior fiscal year of the Company or the current year target bonus, which
ever is larger.
(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 twelve (12) months, or eighteen (18) 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
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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 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. Xxxxxx
00000 Xxxxx Xxxxxx Xxx.
Xxxxxxxxxx, Xxxxxxxx 00000
If to the Company: 00000 Xxxxxx Xxxxx Xxxx
Xxxxx 000
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Xxxxxxx, Xxxxxxxx 00000
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, including
without limitation the Prior Severance Agreement, 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: January 18, 2000 By:/s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx, Director
EXECUTIVE:
Date: January 18, 2000 /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
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