Exhibit 10.2
EXECUTION COPY
AMENDED AND RESTATED
SEPARATION AGREEMENT
THIS AGREEMENT (this "Definitive Agreement"), amends and restates as of
December 1, 2000 the agreement made and entered into as of November 10, 2000 by
and between Nx Networks, Inc., 00000 Xxxxxx Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx
00000 (the "Company"), and Xxxxxx X. Francesco, 0000 Xxxxxx Xxxx Xxx, Xxxxxx,
Xxxxxxxx 00000 (the "Executive").
W I T N E S S E T H:
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WHEREAS, Executive has served as the Chief Executive Officer of the
Company and as Chairman of the Board of Directors of the Company (the "Board");
WHEREAS, by mutual agreement between Executive and the Company,
Executive has agreed to resign as an employee and officer of the Company and any
of its affiliates effective as of October 31, 2000 (the "Effective Date"); and
WHEREAS, by mutual agreement between Executive and the Company,
Executive has agreed to resign from the Board and as Chairman thereof within 30
days of the Effective Date.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, the Company and Executive agree as
follows:
ARTICLE I: RESIGNATION AND CONSULTANCY
Section 1.1. RESIGNATION. Executive hereby resigns as Chief Executive
Officer of the Company as of the close of business on the Effective Date. This
resignation as Chief Executive Officer will not affect the Executive's position
as a member of the Board of Directors as provided in the Company's By-laws,
however, he will not have a contractual right to remain on the Board.
Notwithstanding any contrary provision contained in the Employment Agreement
between the Company and Executive dated March 22, 1999, and all subsequent
amendments thereto (the "Employment Agreement"), such resignations shall not be
deemed to be a breach by Executive or the Company of the Employment Agreement,
and in consideration for the payments and benefits herein described, the
Employment Agreement, except for sections thereof that are specifically referred
to and incorporated herein by reference, shall terminate and cease to have any
effect as of the Effective Date notwithstanding any survival clauses therein
contained.
Section 1.2. CONSULTING SERVICES. Executive shall serve as a consultant to
the Company during the period beginning on the Effective Date and ending on
October 31, 2001, in exchange for an annual fee of $150,000. Such fee shall be
paid in equal monthly installments commencing as of the Effective Date, with the
first payment made no later than five days after the expiration of the
revocation period provided under Article VII and each subsequent payment made no
later than five days after the end of the month to which it relates. The Company
shall not treat such payments as wages subject to withholding, and Executive
agrees to be responsible for all taxes due with respect to such payments.
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Executive agrees to be available for consultation with the Board and the Chief
Executive Officer of the Company as either shall reasonably request. Such
consultation shall not exceed 60 hours in any calendar month or seven hours in
any one day.
ARTICLE II: SEVERANCE PAYMENTS AND BENEFITS
Section 2.1. SEVERANCE PAYMENTS. Provided that Executive has not revoked
the general release of claims contemplated herein, or exercised his revocation
rights under Article VII (a) Executive shall receive his base salary computed at
an annual rate of $275,000 until the Effective Date, which amount shall be paid
in a single lump sum not later than 15 days after the Effective Date; (b)
Executive shall continue to receive base salary payments computed at an annual
rate of $275,000 for a period of three years from the Effective Date (the
"Severance Period"), payable in accordance with the Company's standard payroll
practices, which payments shall total $825,000; and (c) Executive shall be paid
for six weeks of earned but unused vacation time not later than five days after
the date this Definitive Agreement is executed (such amounts collectively
referred to as the "Severance Payments"). Executive acknowledges that the
Severance Payments shall be made in full satisfaction of any and all amounts due
to Executive from the Company as of the Effective Date.
Section 2.2. OPTIONS. Provided that Executive has not exercised his
revocation rights under Article VII, Executive has the following rights with
respect to options to acquire Company stock: (a) The Company acknowledges that
Executive has exercised options for, and currently has the right to own,
1,000,000 shares of the Company's common stock upon the payment of the
applicable withholding taxes and will receive a certificate evidencing such
ownership upon payment of such taxes. (b) Notwithstanding the terms and
conditions of any stock option agreement between the Company and Executive to
the contrary, on the Effective Date, all unvested stock options held by
Executive that are scheduled to vest during the Severance Period, shall
immediately vest and shall be exercisable for a period of four years following
the Effective Date. The Company acknowledges that Executive will thereupon hold
vested options to purchase 2,000,000 shares of the Company's common stock. The
Company shall use its best efforts to register the underlying shares as soon as
practicable after execution by both parties of this Definitive Agreement for
resale under the Securities Act of 1933. (c) Upon execution by both parties of
this Definitive Agreement, Executive will receive 500,000 additional options to
purchase common stock with an exercise price per share equal to $1.00. The
underlying shares shall have the same rights to registration as with all of
Executive's options. One eighth (62,500) of these options shall become
exercisable at the beginning of every three month period with the first such
period commencing on the date of execution of this Definitive Agreement. All
such options shall be exercisable upon a Change of Control (as defined in
Section 3(g) of the Employment Agreement, which Section is incorporated herein
by reference, with a revision whereby "50%" will replace "75%" in Section
3(g)(ii)). These options shall terminate five years after the date of execution
of this Definitive Agreement.
Section 2.3. LIMITATION ON STOCK SALES. During the Severance Period,
Executive shall not, without the written consent of the Company, sell in any
calendar month an aggregate amount of shares of the Company's common stock
(whether Executive holds such shares as of the Effective Date or subsequently
acquires them by means of the exercise of options) in excess of 1% of the
reported trading volume in such common stock on the Nasdaq for the previous
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calendar month. The limitations of this Section 2.3 shall terminate, however, if
the average closing price for such common stock exceeds $10 per share for a 10
trading day period.
Section 2.4. COMPANY BENEFITS. The Executive shall be entitled to continue
to participate in all medical, health and life insurance plans at the same
benefit level at which he was participating as of the Effective Date until the
earlier of:
(a) the end of the Severance Period; or
(b) the date, or dates, he receives equivalent
coverage and benefits under the plans and programs of a subsequent employer
(such coverage and benefits to be determined on a coverage-by-coverage, or
benefit by benefit, basis); provided that (i) if the executive is precluded from
continuing his participation in any employee benefit plan or program that
provides other or additional benefits then due or earned in accordance with
applicable plans and programs of the Company, for that period he shall receive
cash payments equal on an after-tax basis to the cost to him of obtaining the
benefits provided under the plan or program from which he is precluded, (ii)
such cost shall be deemed to be the lowest reasonable cost that would be
incurred by the Executive in obtaining such benefit himself on an individual
basis, and (iii) payment of such amounts shall be made quarterly in advance.
Section 2.5. WITHHOLDING OF TAXES. The Company may withhold from any
benefits or compensation payable under this Definitive Agreement all federal,
state, city or other taxes as may be required pursuant to any law or
governmental regulation or ruling.
Section 2.6. NO OTHER PAYMENTS. Except as specifically provided herein
or as otherwise may be required by law, Executive shall not be entitled to
receive any other payments, benefits or severance amounts from the Company
following the Effective Date, whether pursuant to the Employment Agreement or
otherwise.
ARTICLE III: CONFIDENTIAL INFORMATION
Executive shall continue to comply with the restrictions set forth in
Section 5 of the Employment Agreement, which Section is incorporated herein by
reference.
ARTICLE IV: NON-COMPETITION; NON-SOLICITATION; NON-DISPARAGEMENT
Section 4.1. ACKNOWLEDGEMENTS. Executive acknowledges (a) that during his
service and employment with the Company, he acquired special expertise, unique
knowledge and talent in conducting his duties and that Executive had substantial
contacts with customers, suppliers, advertisers and vendors of the Company and
its affiliates; (b) that Executive was placed in a position of trust and
responsibility and had access to a substantial amount of Confidential
Information, as defined in the Employment Agreement; (c) that the Company could
be harmed if such expertise, knowledge, talent, contacts, or Confidential
Information were used in competition with the Company; (d) that during the time
of his employment with the Company, he gained valuable information about the
identity, qualifications, and on-going performance of the employees of the
company; (e) that he is capable of obtaining gainful employment that does not
violate the restrictions contained in this Definitive Agreement; (f) that due to
Executive's special experience and talent, the breach of this Article IV cannot
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be reasonably or adequately compensated solely by damages in an action at law;
and (g) that a material inducement for the Company in executing this Definitive
Agreement and making the payments hereunder is Executive's willingness to be
bound by the terms of this Article IV.
Section 4.2. NON-COMPETITION; NON-SOLICITATION. Executive confirms that he
will comply with all the terms of Section 6 of the Employment Agreement, which
Section is incorporated herein by reference, and that the "Restricted Period"
shall have the meaning set forth in Section 6(e)(i).
Section 4.3. NON-DISPARAGEMENT. Executive and the Company each agree to not
disparage the other, their respective affiliates, and their respective officers,
directors, employees, representatives, agents, and their respective heirs and
assigns.
Section 4.4. MISCELLANEOUS. Executive acknowledges that the restrictions,
prohibitions and other provisions of this Article IV are reasonable, fair and
equitable in scope, term and duration, are necessary to protect the legitimate
business interests of the Company and its affiliates and are a material
inducement to the Company to enter into this Definitive Agreement and make the
payments hereunder. It is the intention of the parties hereto that the
restrictions contained in this Article IV be enforceable to the fullest extent
permitted by applicable law. Therefore, if, at any time, any provision of this
Article IV shall be determined to be invalid or unenforceable by reason of being
vague or unreasonable as to area, duration, or scope of activity, this Article
IV shall be considered divisible and shall become and be immediately amended to
only such area, duration and scope of activity as shall be determined to be
reasonable and enforceable by the court or other body having jurisdiction over
the matter, or, if such court or other body does not expressly determine what
would be reasonable and enforceable, by the Company. Executive agrees that this
Article IV as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.
ARTICLE V: RELEASE
Section 5.1. RELEASE OF KNOWN AND UNKNOWN CLAIMS BY EXECUTIVE.
(a) It is understood and agreed by the parties to
this Definitive Agreement that, in consideration of the mutual promises and
covenants contained in this Definitive Agreement, and after consultation with
counsel, Executive for himself and each of his respective heirs,
representatives, agents, successors and assigns, irrevocably and unconditionally
releases and forever discharges the Company, and its respective current and
former officers, directors, shareholders, employees, representatives, heirs,
attorneys and agents, as well as its respective predecessors, parent companies,
subsidiaries, affiliates divisions, successors and assigns, and their respective
current and former officers, directors, shareholders, employees,
representatives, attorneys and agents, from any and all causes of action,
claims, actions, rights, judgments, obligations, damages, demands, accountings
or liabilities of whatever kind or character, which Executive may have against
them, or any of them, by reason of or arising out of, touching upon or
concerning Executive's employment with the Company and the separation of his
employment, or any and all other matters of whatever kind, nature or
description, whether known or unknown, suspected or unsuspected. Executive
acknowledges that this release of claims specifically includes, but is not
limited to, any and all claims for fraud; breach of contract; breach of the
implied covenant of good faith and fair dealing; inducement of breach;
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interference with contractual rights; wrongful or unlawful discharge or
demotion; violation of public policy; invasion of privacy; intentional or
negligent infliction of emotional distress; intentional or negligent
misrepresentation; conspiracy; failure to pay wages, benefits, vacation pay,
severance pay, attorneys' fees, or other compensation of any sort; defamation;
unlawful effort to prevent employment; discrimination on the basis of race,
color, sex, national origin, ancestry, religion, age, disability, handicap,
medical condition or marital status, whether such claim would arise under,
without limitation, the laws of a state; Title VII of the Civil Rights Act of
1964 (Title VII, as amended), 42 U.S.C. ss.2000, ET SEQ.; the Age Discrimination
in Employment Act ("ADEA"), 29 U.S.C. ss.621, ET SEQ.; the Older Workers Benefit
Protection Act ("OWBPA"), 29 U.S.C. ss.626(f); the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"); the Americans with Disabilities Act
("ADA"); the Occupational Safety and Health Act ("OSHA") or any other health
and/or safety laws, statutes or regulations; the Employee Retirement Income
Security Act of 1974 ("ERISA"); or the Internal Revenue Code of 1986, as
amended.
(b) Notwithstanding the provisions of this Section
5.1, nothing in this Definitive Agreement shall be construed to constitute any
release or waiver by Executive of his rights or claims against the Company
arising out of or referred to in this Definitive Agreement or the enforcement
hereof or which arise after the date of this Definitive Agreement. In addition,
as of the Effective Date, the Executive shall release the Company of all of its
obligations under the Employment Agreement.
(c) Executive represents and warrants that he has
not assigned or subrogated any of his rights, claims and causes of action,
including any claims referenced in this Definitive Agreement, or authorized any
other person or entity to assert such claim or claims on his behalf, and he
agrees to indemnify and hold harmless the Company against any assignment of said
rights, claims and/or causes of action.
Section 5.2. RELEASE OF CLAIMS BY THE COMPANY. Subject to Executive not
exercising his revocation rights under Article VII, the Company hereby
irrevocably and unconditionally releases, waives and fully and forever
discharges Executive, from and against any and all claims, liabilities,
obligations, covenants, rights, demands and damages of any nature whatsoever
which are known or unknown to the Company as of the date of this Definitive
Agreement, arising from, by reason of or in any way related to any transaction,
event or circumstance which occurred or existed prior to and including the date
of this Definitive Agreement. Notwithstanding the provisions of this paragraph,
nothing in this Definitive Agreement shall be construed to constitute any
release or waiver by the Company of its rights or claims against Executive
arising out of or referred to in this Definitive Agreement or the enforcement
hereof or which arise after the date of this Definitive Agreement. In addition,
as of Effective Date, the Company shall release Executive of all of his
obligations under the Employment Agreement.
ARTICLE VI: MISCELLANEOUS
Section 6.1. REMEDY. If Executive engages in or performs, either directly
or indirectly, any of the acts described in Articles III or IV of this
Definitive Agreement or, in any other way, violates either of such Articles, it
is agreed that the Company shall have the right to seek and shall be entitled to
full injunctive relief, to be issued by any competent court of equity, enjoining
and restraining Executive and each and every other person, firm, organization,
association, or corporation concerned therein, from the continuance of such
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violative acts. The foregoing remedies shall not be deemed to limit or prevent
the exercise by the Company of any or all further rights and remedies which may
be available to the Company hereunder or at law or in equity.
Section 6.2. NOTICES. For purposes of this Definitive Agreement, notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when personally delivered, sent by facsimile
or when mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed to such address as provided herein or sent
to such other address or facsimile number as each party may furnish to the other
in writing from time to time in accordance with this Section 6.2.
Section 6.3. APPLICABLE LAW. This Definitive Agreement is entered into
under, and shall be governed for all purposes by, the laws of the Commonwealth
of Virginia without giving effect to any choice of law principles.
Section 6.4. NO WAIVER. No failure by either party hereto at any time to
give notice of any breach by the other party of, or to require compliance with,
any condition or provision of this Definitive Agreement shall (i) be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time or (ii) preclude insistence upon strict compliance in
the future.
Section 6.5. SEVERABILITY. If a court of competent jurisdiction determines
that any provision of this Definitive Agreement is invalid or unenforceable,
then the invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Definitive Agreement,
and all other provisions shall remain in full force and effect and such invalid
or unenforceable provision shall be reformulated by such court to preserve the
intent of the parties hereto.
Section 6.6. COUNTERPARTS. This Definitive Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which together will constitute one and the same Agreement.
Section 6.7. HEADINGS. The paragraph headings have been inserted for
purposes of convenience and shall not be used for interpretive purposes.
Section 6.8. GENDER AND PLURALS. Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.
Section 6.9. AFFILIATE. As used in this Definitive Agreement, unless
otherwise indicated, "affiliate" shall mean any person or entity which directly
or indirectly through any one or more intermediaries owns or controls, is owned
or controlled by, or is under common ownership or control with the Company or
Executive.
Section 6.10. ASSIGNMENT AND DELEGATION. This Definitive Agreement is
binding on Executive and the Company and their successors and assigns; PROVIDED,
HOWEVER, that the rights and obligations of the Company under this Definitive
Agreement may be assigned or delegated to a successor entity by the Company. No
rights or obligations of Executive hereunder may be assigned or delegated by
Executive to any other person or entity, except by will or the laws of descent
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and distribution. In the event of Executive's death prior to receipt by
Executive of all amounts payable by the Company hereunder, such amounts shall be
payable to Executive's designated beneficiaries on the same schedule as provided
for in this Definitive Agreement.
Section 6.11. ENTIRE AGREEMENT. Except as otherwise specifically provided
herein, this Definitive Agreement constitutes the entire agreement of the
parties with regard to the subject matter hereof, contains all the covenants,
promises, representations, warranties and agreements between the parties with
respect to Executive's resignation from the Company and supersedes all prior
employment or severance agreements between Executive and the Company or any of
its predecessors or affiliates, including, but not limited to, the Employment
Agreement. Executive acknowledges and agrees that the consideration provided for
herein is adequate consideration for Executive waiving his rights under the
Employment Agreement. Except as otherwise provided herein, each party to this
Definitive Agreement acknowledges that no representation, inducement, promise or
agreement, oral or written, has been made by either party, or by anyone acting
on behalf of either party, which is not embodied herein, and that no agreement,
statement, or promise relating to Executive's resignation from the Company, that
is not contained in this Definitive Agreement, shall be valid or binding. Any
modification of this Definitive Agreement will be effective only if it is in
writing and signed by the party to be charged.
Section 6.12. ARBITRATION. Except as otherwise necessary to secure the
remedy specified in Section 6.1 of this Definitive Agreement, any dispute
arising between the Company and Executive with respect to the performance or
interpretation of this Definitive Agreement or its associated Term Sheet shall
be submitted to arbitration, before one arbitrator, in Fairfax County, Virginia
for resolution in accordance with the commercial arbitration rules of the
American Arbitration Association, modified to provide that the decision by the
arbitrator shall be final and binding on the parties, shall be furnished in
writing, separately and specifically stating the findings of fact and
conclusions of law on which the decision is based, and shall be rendered within
90 days following impanelment of the arbitrator. The cost of arbitration shall
initially be borne by the party requesting arbitration. Following a decision by
the arbitrator, the costs of arbitration shall be divided and legal fees shall
be awarded as directed by the arbitrator.
Section 6.13. LEGAL FEES. The Company shall pay Executive's reasonable
legal fees and expenses up to $15,000 incurred in connection with the
preparation and execution of this Definitive Agreement and its associated Term
Sheet. Such fees and expenses shall be paid in full within 10 days of the later
of (a) execution of this Definitive Agreement or (b) Executive's submission to
the Company of a xxxx from Executive's law firm.
Section 6.14. INDEMNIFICATION. Notwithstanding Section 5.1, the Company
shall indemnify Executive consistent with Section 9 of the Employment Agreement,
which Section is incorporated herein by reference. Executive shall also be
indemnified as a consultant to the same extent as set forth for an officer or
employee in such Section 9. In addition, the Executive will continue to benefit
from the terms of the Company's directors and officers liability insurance
policies to the same extent as other directors.
Section 6.15. PRESS RELEASE. Executive acknowledges that the Company has
given Executive the opportunity to review and comment upon the press release
announcing Executive's resignation. Following the Effective Date, Executive
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shall make no public statements regarding his resignation, the terms of this
Definitive Agreement or with respect to the Company without first consulting
with the Company and obtaining the prior written approval of the Company.
ARTICLE VII: EXECUTIVE ACKNOWLEDGEMENTS
Executive acknowledges that:
(a) He has read and understands the terms of this Definitive
Agreement and has voluntarily agreed to these terms without
coercion or undue persuasion by the Company or any officer,
director or other agent thereof;
(b) He has been encouraged by the Company to seek, and has
sought and received, competent legal counsel in his review and
consideration of this Definitive Agreement and its terms; and
(c) He has been given the opportunity to consider entering
into this Definitive Agreement for twenty-one days, and if he
should execute this Definitive Agreement prior to the
expiration of the 21-day consideration period, he waives his
right to consider the Definitive Agreement for twenty-one
days, and
(d) He may revoke this Definitive Agreement within seven days
of the day he executes it. Executive agrees to give notice of
such revocation by certified mail to the attention of the
Company's General Counsel at the address provided above. This
Definitive Agreement shall not be effective until the
expiration of the 7-day revocation period without revocation
by Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Definitive
Agreement as of the date first written above, but effective as of the Effective
Date.
NX NETWORKS, INC.
By:_____________________________________
________________________________________
Xxxxxx X. Francesco
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