SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release (this "Agreement"), by and
between Michael Margolies ("Margolies"), an individual residing at 2101 N. 51st
Avenue, Hollywood, FL 33201, and Precept Business Services, Inc., a Texas
corporation ("Precept") is made and entered into as of the date of Margolies'
execution of this Agreement.
RECITAL
Margolies and Precept have agreed that it is in the best interests of
Margolies and Precept to terminate their relationship as provided herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. RESIGNATION. Simultaneously with the execution of this Agreement,
Margolies has tendered to Precept his resignation, a copy of which is
attached as Exhibit A hereto, effective as of the close of business on June
30, 1998, (the "Resignation Date") as an officer, director, employee and
agent of Precept and its affiliates, and after the Resignation Date, except
as specifically provided in Section 4, neither Margolies nor Precept shall
represent or state to any party that Margolies has any authority to act for
or on behalf of Precept or its affiliates or has any relationship with
Precept or its affiliates other than as a shareholder. The resignation
letter reflects that Margolies voluntarily resigned from any and all
positions of officer and/or director he held with Precept, its affiliates and
subsidiaries.
2. SEVERANCE. For a period commencing as of the Resignation Date
and ending March 31, 2000 (the "Severance Period"), Precept shall (A) pay to
Margolies on a monthly basis, net of any applicable withholding for taxes and
any other authorized deductions, an amount equal to $21,075 (the "Monthly
Payment"), (B) maintain in full force and effect Precept's health, disability
and life insurance currently available to Margolies to the same extent and in
the same manner as would be available to Margolies if he remained as a
full-time Vice Chairman of Precept; including, but not limited to, all
deductions required to cover Margolies' contribution to the monthly cost of
such insurance and (C) pay the premiums associated with the current personal
life insurance policy covering Margolies' life (not to exceed 5 quarterly
amounts of $12,500 for an aggregate of $62,500), with gross proceeds payable
to the Margolies Family Trust.
3. MUTUAL RELEASES. (a) Margolies hereby for himself and on behalf
of anyone claiming through him irrevocably and unconditionally releases,
acquits and discharges forever Precept, its successors, assigns, divisions,
subsidiaries, shareholders, affiliates, predecessors, employees, agents,
officers, directors, and attorneys (the "Releasees") from any and all causes
of action, claims and demands existing on or before the date of this
Agreement, whether known or unknown, including, but not limited to, claims
arising in any way from his employment with Precept, its affiliates or
predecessors, the separation of his employment with Precept and its
affiliates, his service as an officer and director of Precept or its
affiliates or predecessors (hereafter in this Section 3(a) collectively
referred to as the "Claims" or individually as the "Claim"). Said Claims
include, but are not limited to, Claims for: (1) violation of the Age
Discrimination in Employment Act of 1967, as amended, (2) employment
discrimination (including
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claims of sex discrimination or sexual harassment) or retaliation under Title
VII (42 U.S.C. section 2000 et seq., and under 42 U.S.C. Section 1981 through
Section 1983); (3) disputed wages; (4) wrongful discharge or breach of any
alleged employment contract, express or implied; and (5) any tort, including
invasion of privacy, defamation, fraud and infliction of emotional distress.
The release contained in this Section 3 (a) shall not affect any rights that
may be granted to Margolies, or obligations of Precept, under the terms of
this Agreement, that certain Registration Rights Agreement, dated March 19,
1998, by and among Precept, Margolies and The Margolies Family Trust; and
that certain Agreement and Plan of Reorganization, dated November 16, 1997,
by and among U.S. Transportation Systems, Inc., Precept and Precept
Transportation Services, L.L.C. Margolies hereby agrees to not bring any
legal action, either civil or criminal, against any of the Releasees for any
Claim released under this Agreement and represents and warrants that no such
Claim has been transferred and that no such legal action has been filed to
date. Margolies agrees that he will not accept any award of damages if any
Claim is brought on his behalf and further will assign any such award to
Precept.
(b) Precept on behalf of itself and its subsidiaries and other entities
under its control, hereby releases and discharges forever Margolies, his
family, heirs, successors, assigns, agents, and attorneys from any and all
causes of action, claims and demands existing on or before the date of this
Agreement, whether known or unknown, including, but not limited to, claims
arising in any way from Margolies' employment by Precept or its affiliates or
predecessors, his service as an officer, employee, or director of Precept or
its affiliates or predecessors, and his status as a shareholder of Precept or
its affiliates or predecessors; provided, however, that the release contained
in this Section 3 (b) shall not affect any rights that may be granted to
Precept, or obligations of Margolies, under the terms of this Agreement, that
certain Registration Rights Agreement, dated March 19, 1998, by and among
Precept, Margolies and The Margolies Family Trust; and any executory
obligations of Margolies, individually, as an officer and/or director of
Transportation Equities, Inc. ("TEI"), and as trustee of the Liquidating
Trust all as contemplated by and pursuant to that certain Agreement and Plan
of Reorganization, dated November 16, 1997, by and among U.S. Transportation
Systems, Inc., Precept and Precept Transportation Services, L.L.C. Precept
hereby agrees to not bring any legal action, either civil or criminal,
against Margolies for any claim released under this Agreement and represents
and warrants that no such claim has been filed to date.
(c) Margolies and Precept agree that Margolies will not, directly or
indirectly, disclose the fact of and terms of this Agreement, including the
severance benefits, to anyone, except legal and tax advisors (each of which
must be informed of, and must agree to comply with, this confidentiality
provision) or as otherwise required by law.
4. FINDER. (a) During the Severance Period Margolies agrees to assist
Precept exclusively in acquiring through merger, stock or asset purchase, the
entities listed on Exhibit B (collectively the "Companies" and individually
the "Company") or otherwise entering into a transaction with substantially
such effect (a "Transaction"). Margolies may submit additional names of
prospects for consideration to Douglas R. Deason ("Deason"), the President
and Chief Operating Officer of Precept. A prospect will not be added and
included if the prospect has been previously introduced to Precept by a
person other than Margolies. Margolies shall use his best efforts to assist
Precept in consummating the Transaction, including introducing the parties,
providing information to Precept which would be helpful in analyzing the
transaction subject to any applicable
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legal restrictions; and otherwise assisting Precept as reasonably requested
until the closing of the Transaction. Although Margolies shall at all times
act as an independent contractor and not as an agent or partner of Precept,
Margolies shall cooperate with Precept as reasonably required by Precept in
order to ensure an appropriate and satisfactory introduction and continuing
relationship between Precept and the Company.
(b) Margolies shall be paid a fee in cash (the "Fee") on the
basis set forth on Exhibit B at the final legal closing of the Transaction
("Closing"). In the event a definitive agreement, with respect to a prospect
listed on Exhibit B, is fully executed within 6 months of when the "Finder"
relationship between Margolies and Precept expires, then Margolies shall be
paid upon the Closing of the Transaction contemplated in such definitive
agreement.
(c) In the event 75% of the aggregate of all Fees paid to Margolies
shall exceed $63,225 (the "Fee Threshold") then the Monthly Payment for each
of January, February and March 2000 shall be reduced, dollar for dollar, by
the amount by which such 75% exceeds the Fee Threshold. Such reduction can in
no event exceed $63,225. For example, if 75% of all Fees, at any time,
totaled $83,225, than the March, 2000 Monthly Payment would be reduced by
$20,000.
5. COOPERATION. During the Severance Period Margolies shall provide
the following as reasonably requested by Precept:
(a) information relating to Margolies and his ownership of Precept
Class A common stock that is required for filings under the Securities Act of
1933 and reports filed by Precept under the Securities Exchange Act of 1934
("Exchange Act");
(b) assistance in any litigation in which Precept is involved that
relates to matters in which Margolies participated or about which Margolies
may have knowledge; and
(c) technical advice relating to transportation services matters.
Precept shall cause Ron Sorci to be reasonably available to
Margolies with respect to matters involving TEI and The Liquidating Trust and
shall cooperate with Margolies, TEI and The Liquidating Trust with respect to
making available documents, information and the like for purposes of the
winding up and liquidation of TEI and The Liquidating Trust.
6. CONFIDENTIALITY AND NON-COMPETITION. In his various positions with
Precept and its affiliates, and their predecessors, Margolies has had access
to and has become acquainted with various confidential information.
Margolies agrees to treat such information as confidential and not to
disclose any such information to anybody. Until the end of the Severance
Period, Margolies shall not, without the prior written consent of Precept,
directly or indirectly, engage in any non transportation business similar to
what Precept or any of its affiliates is currently involved, or
transportation service businesses of the type currently conducted by Precept
or its affiliates in the geographical locations such business are conducted
or any business which Margolies is paid a Fee pursuant to Section 4 of this
Agreement.
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7. OTHER AGREEMENTS. (a) Simultaneously with the execution of this
Agreement, that certain Executive Employment Agreement by and between
Margolies and Precept, dated March 19, 1998, shall terminate.
(b) Any other written agreements or instruments that may exist on
the date of this Agreement shall remain in place and shall not be affected by
the terms and provisions of this Agreement.
8. GENERAL.
(a) AMENDMENT AND WAIVER. This Agreement may not be amended or
modified or any provision hereof waived except by an instrument in writing
signed by or on behalf of each of the parties hereto. Notwithstanding
anything to the contrary contained herein, a wavier that does not adversely
affect all of the parties hereto may be executed only by the adversely
affected party.
(b) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning on interpretation of this Agreement.
(c) ASSIGNMENT. Neither party may assign its rights or delegate
its obligations hereunder without the prior written consent of the other
party.
(d) NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be given or made by delivery in
person, by courier services, telecopy, telegram, telex or registered or
certified mail (postage prepaid, return receipt required) to the respective
parties at the following addresses:
If to Precept: Precept Business Services
1909 Woodall Rodgers Freeway
Suite 500
Dallas, Texas 75201
Attention: General Counsel
If to Margolies: Michael Margolies
2101 N. 51st Avenue
Hollywood, FL 33201
With a copy to: Robert Brantl, Esq.
Bressler, Amery & Ross
17 State Street
New York, NY 10004
(e) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral,
among the parties hereto with respect to the subject matter.
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(f) GOVERNING LAW. This Agreement will be governed by, and
constructed in accordance with, the laws of the State of Texas.
(g) SEVERABILITY. If any term or other provision of this
Agreement is finally determined by a court of competent jurisdiction to be
invalid, illegal or incapable of being enforced under any law or public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto will negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner. Specifically excepted from this requirement to negotiate
are any questions concerning the reasonableness of the limitations upon
competition.
(h) SPECIFIC PERFORMANCE. The parties hereto acknowledge that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that neither party
will have an adequate remedy at law in such case. Accordingly, the parties
hereto agree and consent that the other will be entitled to a decree of
specific performance, injunctive relief mandamus or other appropriate remedy
to enforce performance of this Agreement, in addition to any other remedy at
law or equity.
(i) FEDERAL OLDER WORKS BENEFIT PROTECTION ACT. Margolies
acknowledges that he has been informed of his rights under the Federal Older
Workers Benefit Protection Act that:
(A) He has the right to consult with an attorney before signing
this Agreement;
(B) He does not release rights or claims under the Age
Discrimination in Employment Act of 1967, as amended, that
may arise after the date this Agreement is executed by
Margolies;
(C) He has twenty-one (21) days from the date above to consider
this Agreement; and
(D) He has seven (7) days after signing this Agreement to revoke
this Agreement, but only to the extent it releases a claim
for age discrimination under the Age Discrimination in
Employment Act of 1967, as amended. This revocation can be
made by delivering a written notice of revocation to
Precept's General Counsel, at the following address: 1909
Woodall Rodgers Fwy, Dallas, Texas 75201. For this
revocation to be effective, written notice must be received
by Precept no later than 5:00 p.m. on the seventh day after
Margolies signs this Agreement. Margolies understands that
the severance allowance will not be paid until after the
seven-day revocation period has passed without Margolies
having given notice of revocation.
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(j) NO DISPARAGING REMARKS. Margolies agrees to refrain from
making disparaging, negative or other similar remarks concerning Precept or
any of its subsidiary or affiliated corporations or entities, or their past
and present respective officers, directors, shareholders, clients or
employees.
(k) TAXABILITY. Margolies agrees and acknowledges that no
representations have been made to him or to his representatives concerning
the taxable nature of any consideration provided to him pursuant to this
Agreement.
(l) ARBITRATION. Any controversy or claim arising out of, or
relating to, this Agreement, or its breach, shall be settled by arbitration
in the City of Chicago in accordance with the then governing rules of the
American Arbitration Association. Judgement upon the award rendered may be
entered and enforced in any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement.
PRECEPT BUSINESS SERVICES, INC.
By:
------------------------------------
Name: David L. Neely
Title: Chairman of the Board
and Chief Executive Officer
------------------------------
Date
---------------------------------------
Michael Margolies
------------------------------
Date
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EXHIBIT A
---------
July 1, 1998
Mr. David L. Neely
Chairman of the Board
and Chief Executive Officer
Precept Business Services, Inc.
1909 Woodall Rodgers Fwy. Suite 500
Dallas, Texas 750201
Dear David:
As we discussed and agreed, I hereby voluntarily tender my resignation
effective as of the close of business on July 1, 1998, on the terms and
conditions set forth in the Severance Agreement between Precept Business
Services, Inc. ("Precept") and me dated as of July 1, 1998, as Vice Chairman
of the Board of Directors of Precept, and, as appropriate, as an officer,
director, employee and agent of any and all Precept affiliates. My
resignation is not conditioned upon acceptance by the Precept Board of
Directors or the Board of Directors of any of its affiliates.
Best wishes for your continued success.
Sincerely yours,
Michael Margolies
cc: Precept Board of Directors
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EXHIBIT "B"
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IDENTIFICATION OF THE COMPANY:
- ------------------------------
EXPENSES: Expenses will be reimbursed only in the event they have been approved
- -------- by David L. Neely.
FINDER'S FEE:
- -------------
1% of the last twelve months revenue of the Company as reflected in the
most recent, available financial statements of the Company used in
determining the purchase price in the Transaction.
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