Exhibit 10.6
Execution Copy
SEPARATION AGREEMENT
SmartServ Online, Inc., a Delaware corporation (such entity, along with
its successors and assigns, hereinafter referred to as the "Company"), and Mario
F. Rossi (hereinafter collectively with his heirs, executors, administrators,
successors and assigns, referred to as "Employee"), mutually desire to enter
into this Separation Agreement effective as of the "Effective Date" (defined in
Section 17 hereof), and agree that:
Employee understands that this Separation Agreement is executed for the
benefit of the Company and each of its affiliates, subsidiaries, predecessors,
successors and assigns, as well as each of the current and former directors,
officers, employees and agents of the Company and each such other entity, all
both individually and in their official capacities (such individuals and
entities collectively referred to in this Separation Agreement as the
"Representatives");
Employee has consult with, and has been represented by, an attorney
during the negotiation and execution this Separation Agreement and has been
advised as to the meaning and effect of this Separation Agreement;
Employee has carefully read this Separation Agreement, fully
understands the terms and conditions set out herein and voluntarily agrees to
these terms and conditions.
NOW THEREFORE, the parties hereto, for the full and sufficient
consideration set forth below, hereby agree as follows:
1. EMPLOYEE'S SEPARATION
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The parties acknowledge that, following discussions with each other
and based upon the provisions of this Separation Agreement, Employee retired as
an officer and a director of the Company effective August, 31, 2003 (the
"Retirement Date"). Employee has resigned from all other positions he may hold
with the Company or any of its subsidiaries or other businesses, effective as of
the Retirement Date, and will promptly take such further actions as are
necessary to accomplish such retirement and/or resignations. As of the
Retirement Date, Employee's salary ceased, and any entitlement Employee has or
might have under a Company-provided benefit plan, program or practice,
terminated, except as required by federal or state law or as otherwise described
below.
The parties acknowledge that the Company has invited the Employee to
be a member of the Company's Advisory Board, and that the Employee has accepted
appointment to the Advisory Board.
2. REMUNERATION
------------
The parties acknowledge that up to and including the Retirement
Date, the Employee has earned remuneration in the form of deferred salary of
$112,500 ("Deferred Salary"), in the form of regular salary of $12,500 ("Regular
Salary"), in the form of accrued but unused vacation (10 days) in the amount of
$4,167 ("Vacation" and, together with Regular Salary, "Regular Compensation"),
and in the form of bonus in the amount of $120,750 ("Bonus"). The Company will
pay the Employee his Regular Compensation in two (2) equal installments of
$8,333.50 the first of which shall be due within ten (10) calendar days of the
Effective Date, and the second of which shall be due within thirty (30) calendar
days of the Effective Date. The Employee voluntarily and irrevocably waives,
releases and discharges the Company from any obligation to pay his Bonus. The
Company will reimburse the Employee for any reasonable and necessary business
expenses for which the Employee has requested reimbursement within sixty (60)
calendar days from the Effective Date.
3. NON-RECOURSE NOTE
-----------------
The Employee is the obligor on a promissory note made in favor of
the Company with respect to the purchase of 206,080 shares of Company stock,
which the Employee pledged as collateral for the note. The note is non-recourse
as to its principal amount, but carries an interest payment obligation that
constitutes a personal obligation of the Employee, which obligation, calculated
to the Retirement Date, equals $47,004.00 (the "Accrued Interest").
The Company hereby extends the maturity date of the note to April
15, 2004 (the "New Maturity Date") and agrees to suspend the accrual of interest
on the note for the period between the Retirement Date and the New Maturity
Date, and the note is hereby amended accordingly. On or before the New Maturity
Date, the Employee shall assign and transfer all of said shares of stock to the
Company, and the Company shall, upon receipt of said shares of stock, cancel the
non-recourse debt evidenced by the note.
The parties acknowledge that, on the New Maturity Date, $81,370.69
of the Employee's Deferred Salary shall be offset against the Accrued Interest.
The remaining $31,129.31 shall be paid to the Employee in two (2) equal
installments of $15,564.65, the first of which shall be due within six (6)
months of the Effective Date, and the second of which shall be due within twelve
(12) months of the Effective Date. The Accrued Interest offset and Deferred
Salary payments described in this paragraph shall be, in each case, net of
applicable Federal and state withholding employment taxes. The Company will make
the appropriate state and Federal tax employment and withholding taxes payments
to the respective taxing entities within the time and in the manner prescribed
by applicable law.
4. MEDICAL BENEFITS
----------------
The Employee and his dependents will continue as participants in the
Company-paid group medical benefits until December 31, 2003. Effective January
1, 2003, the Employee will be eligible to receive a COBRA benefit continuation
notice, which will be sent to the Employee as required by law.
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5. EMPLOYMENT AGREEMENT
--------------------
The Amended and Restated Employment Agreement between the Employee
and the Company dated January 1, 1999 and amended September 15, 2000 is hereby
terminated. Any provision of the Employment Agreement to the contrary
notwithstanding, the Employee has no further obligations with respect to Section
9, Non-Competition, described in the Employment Agreement. The Indemnification
provisions of Section 8, and the Non-solicitation of Customers and Suppliers
provisions of Section 10 of the Employment Agreement will remain in full force
and effect for the benefit of the Employee and the Company, respectively, and
are hereby incorporated as terms of this Separation Agreement. The Employee will
not be excluded from coverage under any applicable Company Directors and
Officers Insurance policy.
6. PERSONAL COMPUTERS
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The Company acknowledges and agrees that the Employee is hereby
given custody and ownership of the personal computers currently in his
possession.
7. STOCK OWNERSHIP
---------------
The Employee owns 54,000 shares of the Company's Common Stock
described in Certificate No. SSN0198, and 750 shares of the Company's Common
Stock described in Certificate No. SSN0047. The restrictions legend on said
certificates, including a reference to a shareholder agreement, will be removed
and new certificates without restriction will be issued to the Employee no later
than thirty (30) days after the Effective Date.
8. STOCK OPTIONS
-------------
The Employee shall retain his currently vested stock options,
described on Table One appended to this Separation Agreement, and may be
exercised at any time until expiration on the first anniversary of the Effective
Date, and any stock option agreement to the contrary is hereby amended
accordingly. The Company will issue an amended stock option agreement to the
Employee within thirty (30) calendar days of the Effective Date.
9. WARRANTS
--------
No later than three (3) months after the Effective Date, the Company
will grant to the Employee a warrant to purchase 250,000 shares of Company
common stock (the "Warrant"). The Warrant shall vest on the first (1st)
anniversary of the grant date and expire on the fourth (4th) anniversary of the
grant date, and shall have an exercise price equal to the fair market value of
250,000 shares of Company common stock, determined as of the grant date, but in
no event less than 40 cents per share. The 250,000 shares will be subject to a
restriction precluding the Employee from selling more than 20,000 shares per
day. The Company will include the shares represented by the Warrant in the
registration statement that includes the holders of convertible debentures
issued by the company in May, June and September 2003. The Company expects that
statement to be filed by December 31, 2003.
10. STOCK SPLIT, ADJUSTMENTS
------------------------
As of the date hereof, the Company is planning a recapitalization in
which the number of it authorized, issued and outstanding shares of capital
stock will be reduced pursuant to a 1-for-6 reverse stock split. In the event of
such a reverse-split, the options, warrant, shares, prices, and restrictions
described in Sections 8 and 9 hereof shall be adjusted accordingly.
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11. COMPANY RELEASE
---------------
Company releases and forever discharges the Employee of and from any
and all actions or causes of action, suits, claims, charges, complaints,
damages, liabilities, obligations, promises and contracts whatsoever, in law or
equity, which the Company has, may have or has, had against Employee, including
all unknown, undisclosed and unanticipated losses, wrongs, injuries, debts,
claims or damages to the Company, or by reason of any matter, cause or thing
whatsoever, which Company had, now has, or shall have as of the date of this
Separation Agreement, EXCEPT that the release set forth herein specifically
excludes: (i) claims of fraud, theft, intentional misrepresentation, or other
intentional misconduct by Employee causing harm to the Company: and (ii) claims
that Employee has breached the terms of this Separation Agreement. The Company
represents that it is not currently aware of any claims described in the
foregoing clause (i).
12. RELEASE BY EMPLOYEE
-------------------
(a) In exchange for the monies, benefits and promises described in
Sections 2 through 6, hereof, Employee knowingly and voluntarily releases and
forever discharges the Company and each of its Representatives (collectively
referred to as the "Company Releasees") of and from any and all actions or
causes of action, suits, claims, charges, complaints, damages, liabilities,
obligations, promises and contracts whatsoever, in law or equity, which Employee
now has, may have or has, had against the Company Releasees, including all
unknown, undisclosed and unanticipated losses, wrongs, injuries, debts, claims
or damages to Employee, for, upon, or by reason of any matter, cause or thing
whatsoever, which Employee ever had, now has, or shall have as of the date of
this Separation Agreement (provided that the release set forth herein
specifically excludes Employee's right to enforce the terms of this Separation
Agreement), including, but not limited to:
(i) any and all matters arising out of Employee's employment by
the Company and the cessation of said employment, including, but not
limited to, any claims for wages salary, bonuses, commissions,
incentive pay, stock or stock options, benefits, severance pay,
vacation pay; or other compensation;
(ii) any and all charges, claims or causes of action under federal
law arising out of Employee's employment by the Company and the
cessation of said employment, including, but not limited to, any
alleged violation of the National Labor Relations Act; any claims for
discrimination of any kind under Title VII of the Civil Rights Act of
1964, Sections 1981 through 1988 of Title 42 of the United States Code,
and the Americans With Disabilities Act of 1990; any alleged violation
of the Employee Retirement Income Security Act of 1974 (ERISA) (except
for vested benefits under any qualified retirement plan which are not
affected by this Separation Agreement); any alleged violation of the
Fair Labor Standards Act; any alleged violation of the Occupational
Safety and Health Act; any alleged violation of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA); and any alleged
violation of the Federal Family and Medical Leave Act;
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(iii) any and all charges, claims or causes of action under
Connecticut state law arising out of Employee's employment by the
Company and the cessation of said employment, including, but not
limited to, any alleged violation of Connecticut's Equal Pay Law; Fair
Employment Practices Act; Human Rights and Opportunities Law;
Occupational Safety and Health Laws; AIDS Testing Law; Reproductive
Hazards Law; the Smokers Rights Law; the Family and Medical Leave Law;
the Wage and Hour Laws; the Political Activities provisions; the
Voting, Military Service Leave, Jury and Witness Duty provisions; the
Smoking and Drug Testing provisions; the Whistleblower Protection
provisions; and the Workers' Compensation provisions;
(iv) any and all charges, claims, or causes of action arising out
of Employee's employment by the Company and the cessation of said
employment under the laws of any other state or under the laws of any
municipality or any other governmental authority;
(v) any and all other charges, claims or causes of action under
any other federal, state or local constitution, law, regulation,
ordinance, public policy or common law not heretofore mentioned,
including, but not limited to, all claims for breach of contract
(whether oral or written, express or implied), fraud, negligence,
estoppel, defamation, breach of duty of loyalty, breach of the covenant
of good faith and fair dealing, infliction of emotional distress and
any other statutory or common law claim;
(b) Since Employee is 40 years of age or older, Employee is being
informed that Employee has or may have specific rights and/or claims under the
Age Discrimination in Employment Act of 1967 (ADEA) and Employee represents and
agrees that:
(i) in consideration for the amounts and benefits described in
Sections 2 through 6 of this Agreement, which Employee is not otherwise
entitled to receive, Employee specifically and voluntarily waives any
and all rights and/or claims under the ADEA Employee has or may have
against the Company Releasees to the extent such rights and/or claims
arose prior to or on the date this Agreement was executed;
(ii) Employee understands that rights or claims under the ADEA
which may arise after the date this Agreement is executed are not
waived by Employee;
(iii) Employee is advised to consider the terms of this Agreement
carefully and consult with or seek advice from an attorney of
Employee's choice or any other person of Employee's choosing prior to
executing this Agreement;
(iv) Employee was informed and understands that Employee had up to
twenty-one (21) days, if Employee wished, within which to consider this
Agreement;
(v) Employee has carefully read and fully understands all of the
provisions of this Agreement, and Employee knowingly and voluntarily
agrees to all of the terms set forth in this Agreement; and
(vi) in entering into this Agreement Employee is not relying on
any representation, promise or inducement made by the Company or its
attorneys with the exception of those promises described in this
document.
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13. GOVERNING LAW; SEVERABILITY OF PROVISIONS
-----------------------------------------
This Separation Agreement shall be interpreted under the laws of the
State of Connecticut without giving effect to the principles of conflicts of law
of such state. Its language shall be construed as a whole, according to its fair
meaning, and not strictly for or against either party. Should any provision of
this Separation Agreement be declared illegal or unenforceable by any court of
competent jurisdiction and cannot be modified to be enforceable, such provision
shall be stricken and the remaining terms of this Agreement shall be enforced so
as to give effect to the intention of the parties to the maximum extent
possible. However, if as a result of any action initiated by Employee, any
portion of the release and waiver language contained in Section 14 is ruled to
be unenforceable for any reason, Employee shall return the consideration paid
hereunder to the Company.
14. NO ADMISSION OF LIABILITY
-------------------------
Each party hereto agrees that neither this Separation Agreement nor
the furnishing of the consideration relating to it shall be deemed or construed
at any time for any purpose as an admission by any of them or any of their
respective representatives of any liability or unlawful or improper conduct of
any kind.
15. NO ORAL AMENDMENTS OF AGREEMENT
-------------------------------
This Separation Agreement may not be modified, altered or changed
except upon express written consent of both parties wherein specific reference
is made to this Separation Agreement.
16. ENTIRE AGREEMENT
----------------
This Separation Agreement sets forth the entire agreement between
the parties hereto, and fully supersedes any prior agreements or understandings
entered into with the Employee prior to the date hereof (which are hereby
terminated and of no further force or effect) In deciding to execute this
Separation Agreement, Employee has not relied on any statement or representation
by any of the parties hereto or any of their respective representatives that is
not set forth in this document. In the event of the Employee's death during the
period of this Agreement's performance, all obligations of the parties' set
forth in Sections 2, 3, and 4 above, shall be accelerated to the date of death.
17. EFFECTIVE DATE OF THE SEPARATION AGREEMENT
------------------------------------------
After signing this Separation Agreement, Employee may revoke it for
a period of seven days following said execution. The Agreement shall become
effective and enforceable as of the date on which the aforesaid revocation
period expires (such date, the "Effective Date"). Such revocation must be
personally delivered to the Company or mailed to the Company and post marked
within seven days of execution of this Separation Agreement.
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18. NOTICES
-------
Any Notices or other papers required to be sent pursuant to the
terms of this Agreement shall be sent by certified mail, return receipt
requested, to
Mario F. Rossi SmartServ Online, Inc. (Att'n: CEO)
2250 Butler Turnpike
Suite 150
Plymouth Meeting, PA 19462
with a copy to: with a copy to:
Michael N. LaVelle, Esq. Martin L. McCann, Esq.
Pullman & Comley Zeldes, Needle & Cooper
850 Main Street 1000 Lafayette Boulevard
Bridgeport, CT 06601-7006 Bridgeport, CT 06601-1740
19. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. This Agreement
may be executed and delivered by facsimile.
[intentionally omitted]
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THE PARTIES HAVE READ AND FULLY CONSIDERED THIS SEPARATION AGREEMENT AND ARE
MUTUALLY DESIROUS OF ENTERING INTO SUCH SEPARATION AGREEMENT. EMPLOYEE
UNDERSTANDS THAT THIS DOCUMENT SETTLES, BARS AND WAIVES ANY AND ALL CLAIMS
EMPLOYEE HAD OR MIGHT HAVE AGAINST THE COMPANY AND ITS REPRESENTATIVES. EMPLOYEE
AND COMPANY ACKNOWLEDGE THAT NEITHER IS RELYING ON ANY OTHER REPRESENTATIONS,
WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT. HAVING ELECTED TO EXECUTE THIS
SEPARATION AGREEMENT, TO FULFILL THE PROMISES SET FORTH HEREIN, AND TO RECEIVE
THEREBY THE SUMS AND BENEFITS SET FORTH ABOVE, THE COMPANY AND EMPLOYEE FREELY
AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTER INTO THIS SEPARATION
AGREEMENT.
THEREFORE, the parties to this Separation Agreement now voluntarily and
knowingly execute this Agreement.
Date ________________________ ________________________________________
Mario F. Rossi
SMARTSERV ONLINE, INC.
Date ________________________ By:_____________________________________
Name:
Title:
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IF YOU DO NOT WISH TO USE THE 21-DAY PERIOD,
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PLEASE CAREFULLY REVIEW AND SIGN THIS DOCUMENT
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The undersigned employee acknowledges that I was informed and
understand that I have 21 days within which to consider the Separation
Agreement, have been advised of my right to consult with an attorney regarding
such agreement and have considered carefully every provision of such agreement,
and that after having engaged in those actions, I prefer to and have requested
that I enter into the Separation Agreement prior to the expiration of the 21-day
period.
Dated: _________________________ ______________________________
(EMPLOYEE)
Dated: _________________________ ______________________________
Witness:
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TABLE ONE
EXISTING OPTIONS
EXERCISE PRICE SHARES EXPIRATION DATE
- --------------------------------------------------------------------------------
$1.2900 25,250 10/08/08
OPTIONS TO PURCHASE $1.6250 17,000 11/20/08
COMMON STOCK $0.0938 15,000 10/12/04
$1.4200 7,000 05/29/10
$1.4200 18,750 11/02/10
$1.4200 56,250 11/02/10
- --------------------------------------------------------------------------------
THE COMPANY WILL ISSUE NEW CERTIFICATES WITHIN THIRTY (30) CALENDAR DAYS FROM
THE SEPARATION DATE.
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