Sample Business Contracts
Separation and Settlement Agreement and General Release - Heidrick & Struggles International Inc. and Kevin J. Smith
EXECUTION COPY
KEVIN J. SMITH
SEPARATION AND SETTLEMENT AGREEMENT
AND GENERAL RELEASE
This Separation and Settlement Agreement and General Release (this “Agreement”) is made as of this 13th day of February 2004 (the “Effective Date”), by and between Kevin J. Smith (the “Employee”) and Heidrick & Struggles International, Inc., and Heidrick & Struggles, Inc., both Delaware corporations (collectively, the “Company”) concerning the Employee’s termination of employment with the Company.
WHEREAS, the Company and the Employee entered into that certain Employment Agreement dated as of March 20, 2002, (the “Employment Agreement”);
WHEREAS, the Employee has tendered his resignation as Chief Financial Officer of the Company, to be effective on March 31, 2004 (the “Termination Date”), which the Company accepted on the terms set forth in this Agreement; and
WHEREAS, the Company and the Employee intend that this Agreement shall be in complete settlement of all rights of the Employee under the Employment Agreement or otherwise relating to his employment by the Company.
NOW THEREFORE, in consideration of the mutual promises and agreements set forth below, the Company and the Employee agree as follows:
1. Termination. The Employee’s employment with the Company will terminate by mutual consent effective as of the close of business on the Termination Date and the Employee will continue to be paid his current monthly salary (at a rate of $35,833.33 per month), expense reimbursements and employee benefits and will continue to vest in all incentive and other benefits through the Termination Date.
2. Resignation. The Employee hereby agrees to resign as the Chief Financial Officer of the Company as of the Termination Date. The Employee hereby resigns from all other officer, director and other positions with the Company and all of its affiliates effective as of the close of business on the Effective Date. Employee agrees to execute a letter of resignation, in the form attached hereto as Exhibit A, and shall execute any additional resignation letters as may be reasonably requested by the Company.
3. 2003 and 2004 Bonus Payments.
(a) The Employee shall receive a 2003 Bonus payment (“2003 Bonus”) from the Company in the gross amount of TWO HUNDRED FIFTEEN THOUSAND DOLLARS ($215,000.00) to be paid on the first business day following the date on which this Agreement becomes final and binding pursuant to paragraph 13 below (the “Initial Payment Date”).
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(b) The Employee shall receive a 2004 Bonus payment (“2004 Bonus”) from the Company in the gross amount of FIFTY THREE THOUSAND DOLLARS ($53,000.00) to be paid on the Initial Payment Date.
4. Other Payments. Employee shall receive a series of severance payments from the Company in the aggregate gross amount of EIGHT HUNDRED AND SIXTY THOUSAND DOLLARS ($860,000.00), to be paid in twelve equal monthly installments in the gross amount of SEVENTY-ONE THOUSAND SIX HUNDRED SIXTY-SIX DOLLARS AND SIXTY-SIX CENTS ($71,666.66) (the “Severance Payments”) on the Initial Payment Date and then as of each one-month anniversary of the Termination Date. The Company’s obligation to pay the Severance Payments is conditioned upon the execution of this Agreement, including the execution of the General Release and Waiver, provided in Exhibit B to this Agreement (the “Release”) and the continued compliance by the Employee of all of the terms and conditions of this Agreement. The first Severance Payment shall be made on the Initial Payment Date; provided, however, that in the event that the cash payments to be made to the Employee as of the Initial Payment Date are not adequate to provide for the required tax withholding on such cash payments together with the withholding requirements associated with any non-cash benefits provided hereunder, the Company may accelerate a portion of the Severance Payment installments (starting with the earliest installments due) to the Initial Payment Date in order to satisfy such withholding obligations.
5. Sign-On Loan. The Company shall forgive the outstanding aggregate principal of the loan made to the Employee pursuant to the Employment Agreement, determined as of the Termination Date (projected to be in the amount of EIGHTY-THREE THOUSAND THREE HUNDRED AND THIRTY THREE DOLLARS and THIRTY-THREE CENTS ($83,333.33), after giving effect to the forgiveness which occurred on January 8, 2004), with such forgiveness to be effective as of the Initial Payment Date. The Company shall continue to provide the Employee the gross-up payment regarding any imputed interest through the Initial Payment Date, in accordance with the terms of the Employment Agreement.
6. Restricted Stock Units. Effective as of the Termination Date, the Employee shall forfeit and/or relinquish any and all interests and rights in any unvested restricted stock units awarded under any plan or program maintained by the Company or any of its affiliates. Other than the awards set forth on Exhibit C hereto, the Employee acknowledges and agrees that he does not possess, nor is entitled to, any other restricted stock unit awards under any plan or program of the Company or any of its affiliates.
7. Stock Options. Effective as of the Termination Date, the Employee shall forfeit and/or relinquish any and all interests and rights in and under all unvested outstanding stock options awarded under any plan or program maintained by the Company or any of its affiliates. All outstanding options which are vested as of the Termination Date shall continue to be exercisable for a period of sixty (60) days following the Termination Date. Other than the awards set forth on Exhibit C hereto, the Employee acknowledges and agrees that he does not possess, nor is entitled to, any other stock option awards under any plan or program of the Company or any of its affiliates.
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8. Performance Share Program. Effective as of the Termination Date, the Employee shall forfeit and/or relinquish any and all interests and rights under the Company’s Performance Share Program, for any and all performance periods. Employee acknowledges that he is not entitled to any future participation or payouts with respect to the Performance Share Program.
9. Accrued Vacation. The Employee shall receive payment for all accrued and unused vacation, if any, as of the Termination Date, to the extent provided in accordance with the Company’s standard policies. Such payment shall be paid not later than the Initial Payment Date.
10. Termination of Benefits. Except as specifically provided in this Agreement with respect to plans or arrangements specifically identified in this Agreement, the Employee’s continued participation in all employee benefit (pension and welfare) and compensation plans will cease as of the Termination Date. Any payments made to the Employee pursuant to this Agreement, other than with respect to the continued payment of salary through the Termination Date, shall be disregarded for purposes of determining the amount of benefits to be accrued on behalf of the Employee under any pension or other benefit plan maintained by the Company or its affiliates. Nothing contained herein shall limit or otherwise impair Employee’s right to receive pension or similar benefit payments which are vested as of the Termination Date under any applicable tax qualified pension or other tax qualified benefit plan.
11. Medical Benefits. Employee’s entitlement to continue family medical coverage under the benefit plans of the Company operated in the United States will be determined in accordance with the provisions of section 4980B of the Internal Revenue Code and section 601 of the Employee Retirement Income Security Act (sometimes referred to as “COBRA coverage”).
12. Other Payments. The Employee agrees and acknowledges that, other than as specifically provided for in this Agreement, no additional payments are due from the Company or any affiliate on any basis whatsoever other than reimbursements in accordance with the Company’s policies for ordinary and reasonable expenses incurred on or before the Termination Date.
13. Releases. As part of this Agreement, and in consideration of the additional payments provided to Employee in accordance with this Agreement, the Employee is required to execute the Release and deliver the Release following the Termination Date. This Agreement (including all Exhibits to this Agreement), and the commitments and obligations of all parties hereunder:
(a) shall become final and binding on the Effective Date, subject only to Employee’s execution and delivery of the Release to the Company on the Termination Date and the expiration of the Employee’s right to revoke the execution of the Release in accordance with paragraph 3(d) of the Release, attached as Exhibit B; and
(b) shall not become final and binding if Employee revokes such execution.
The Employee is aware that he may hereafter discover claims or facts in addition to or different from those he now knows or believes to be true with respect to the matters related herein.
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Nevertheless, it is the intention of the Employee to fully, finally and forever settle such matters, and all claims, demands, and causes of action relative thereto, whether known or unknown, which may exist, or previously have existed, between Employee and the Company in connection with such matters, including, without limitation, the termination of Employee’s employment with the Company. In furtherance of such intention, the Release given herein shall be and remain in effect as a full and complete release of all such matters, notwithstanding the discovery or existence of any additional or different claims or facts relative thereto.
(c) Within three business days following such time as the Employee delivers the above Release, the Company shall execute and deliver to Employee a Release in the form set forth in Exhibit B-2.
14. Assistance with Claims. The Employee agrees to cooperate with the Company or any affiliate in the defense, prosecution or evaluation of any pending or potential claims or proceedings involving or effecting the Company or any affiliate during the period of Employee’s employment with the Company (the “Employment Period”) or relating to any decisions in which Employee participated or any matter of which Employee had knowledge. Employee agrees, unless precluded by law, to promptly inform the Company if he is asked to participate (or otherwise become involved) in any claims that may be filed against the Company or any affiliate relating to the Employment Period. Employee also agrees, unless precluded by law, to promptly inform the Company if he is asked to assist in any investigation (whether governmental or private) of the Company or any affiliate (or their actions) relating to any matter occurring during the Employment Period, regardless of whether a lawsuit has then been filed against the Company or any affiliate with respect to such investigation. Specifically and without limitation, Employee will attend and participate in meetings and interviews conducted by Company personnel, and/or attorneys appointed by the Company and may be represented by counsel who may attend such meetings and interviews, and execute written affidavits confirming Employee’s statements in such meetings in respect of any such matters; provided such meetings do not unreasonably interfere with Employees full-time employment or self-employment entered into after the Termination Date. Employee will make himself available for the foregoing at mutually convenient times during business hours from time to time as reasonably requested by the Company. Promptly upon the receipt of the Employee’s written request, the Company agrees to reimburse the Employee for all reasonable out-of-pocket expenses associated with such cooperation, including, without limitation, meals, lodging, travel and ground transportation expenses; provided, however, that such reimbursement shall specifically exclude any fees for legal representation engaged by Employee, that is not otherwise reimbursable pursuant to the Company’s policies in effect at such time or the Company’s By-Laws. This paragraph 14 shall not preclude the Employee from responding to an inquiry in an honest manner.
15. Non-Disparagement. The Employee agrees that on and after the date of this Agreement, he will not make any disparaging, critical or derogatory statement about the Company or any affiliate or their shareholders or any of their officers, directors or employees or otherwise make disparaging comment on any aspects of Employee’s employment with the Company, and the Company agrees not to make any disparaging, critical or derogatory statement about the Employee or Employee’s employment with the Company; provided that the provisions of this paragraph 15 shall not apply to testimony as a witness, any disclosure required by law to be made by the Company or the Employee, the assertion of or defense against any claim of
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breach of this Agreement and shall not require either party to make false statements or disclosures.
16. Restrictive Covenants. Except as may be modified by the following provisions of this paragraph 16, Employee expressly acknowledges and agrees that the Employee will continue to remain subject to the covenant provisions of the Employment Agreement (the paragraphs titled: Confidentiality and Non-Solicitation/Non-Competition) (the “Covenants”), and further agrees that obligations under such provisions are not limited in any way by this Agreement or termination from employment with the Company:
(a) Employee shall return all documents, records and property of the Company and any affiliate of the Company as of the Termination Date. The Employee shall return to the Company no later than the Termination Date any and all original and duplicate copies of all the Employee’s work product and of files, calendars, books, records, notes, notebooks, customer lists and proposals to customers, manuals, computer equipment (including any desktop and/or laptop computers, handheld computing devices, home systems, computer disks and diskettes), mobile telephones (including SIM cards and the like), Blackberry devices, personal data assistants (PDAs), fax machines, and any other magnetic and other media materials the Employee has in his possession or under his control that belong to the Company or any of its affiliates that contain confidential or proprietary information concerning the Company or any of its affiliates or their clients or operations. The Employee also must return and/or agree to immediately return to the Company any keys, credit cards and I.D. cards that belong to the Company or any of its affiliates but are in the Employee’s possession or within the Employee’s control.
(b) Employee agrees not to instigate or participate in any administrative or judicial proceeding against the Company or any affiliate (except for proceedings to enforce this Agreement) unless requested by the Company or otherwise required by law.
(c) Subject to the foregoing provisions of this paragraph 16, the Company will continue to have the right to enforce such obligations of the Covenants as provided in the Employment Agreement.
17. Non-Disclosure. Employee acknowledges that the benefits provided by the Company under this Agreement are not generally available to other employees of the Company, and agrees that, except as may be required by the lawful order of a court or agency of competent jurisdiction, Employee will keep the terms of this Agreement secret and confidential indefinitely. Notwithstanding the foregoing provisions of this paragraph 17, Employee may disclose the contents of this Agreement to his attorneys, accountants and financial advisors and his immediate family, provided that Employee takes steps that are reasonably calculated to assure that such persons do not further disclose the terms of this Agreement. The Employee further agrees that, prior to the commencement of any new employment, if prior to the end of the expiration of the restrictive provisions of the Covenants, he will furnish the prospective new employer with a copy of the provisions of this Agreement (and as needed, relevant provisions of the Employment Agreement) relating to competition, confidentiality, and solicitation. Employee also agrees that, during such period, the Company may advise any new employer or prospective new employer of
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the provisions of this Agreement relating to competition, confidentiality, and solicitation and furnish the new employer or prospective new employer with a copy of such provisions.
18. Withholding for Taxes. All benefits and payments provided to the Employee pursuant to this Agreement which are required to be treated as compensation shall be subject to all applicable withholding and reporting requirements.
19. Settlement of Disputes. The Settlement of Disputes provisions set forth in Section 8 of the Employment Agreement are hereby incorporated by reference and are made part of this Agreement and shall be applicable for all disputes as may arise hereunder, regardless of whether the Employment Agreement is, or may deemed to be, in full force and effect.
20. Attorneys Fees. In the event of any dispute with respect to a breach or asserted breach of this Agreement, the prevailing party as determined by the presiding judge or arbitration panel in said proceeding shall be entitled to recover such party’s reasonable attorneys fees and expenses from the other party.
21. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon each of the parties and upon their respective heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of each party and to their heirs, administrators, representatives, executors, successors, and assigns.
(b) Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Illinois, without regard to the conflict of law provisions of any jurisdiction.
(c) Entire Agreement. This Agreement reflects the entire agreement between the Employee and the Company and, except as specifically provided herein, supersedes all prior agreements and understandings, written or oral relating to the subject matter hereof, it being acknowledged, however, that the Employee shall continue to be subject to the Covenants of the Employment Agreement. To the extent that the terms of this Agreement (including Exhibits to this Agreement) are to be determined under, or are to be subject to, the terms or provisions of any other document, this Agreement (including Exhibits to this Agreement) shall be deemed to incorporate by reference such terms or provisions of such other documents.
(d) Notices. Any notice pertaining to this Agreement shall be in writing and shall be deemed to have been effectively given on the earliest of (a) when received, (b) upon personal delivery to the party notified, (c) one business day after delivery via facsimile with electronic confirmation of successful transmission, (d) one business day after delivery via an overnight courier service or (e) five days after deposit with the United Postal Service, and addressed as follows:
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to the Employee at: |
Mr. Kevin J. Smith 6 Clubside Court Burr Ridge, IL 60521 |
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Or such other address as Employee duly notifies the Company.
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with a copy to: |
William Bettman, Esq. Vedder, Price, Kaufman & Kammholz, P.C. 222 North LaSalle Street Chicago, IL 60601 | |
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to the Company at: |
Heidrick & Struggles International, Inc. 233 South Wacker Drive Suite 4200 Chicago, IL 60606-6303 Attn: Fritz E. Freidinger - General Counsel and Corporate Secretary Fax: (312) 496-1297 | |
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with a copy to: |
Donald L. Norman, Jr., Esq. Mayer, Brown, Rowe & Maw LLP 190 S. LaSalle Street Chicago, IL 60603 Fax: (312)706-9179 | |
(e) Waiver of Breach. The waiver by either party to this Agreement of a breach of any provision of this Agreement shall not operate as or be deemed a waiver of any subsequent breach by such party. Continuation of benefits hereunder by the Company following a breach by the Employee of any provision of this Agreement shall not preclude the Company from thereafter exercising any right that it may otherwise independently have to terminate said benefits based upon the same violation.
(f) Amendment. This Agreement may not be modified or amended except by a writing signed by the parties to this Agreement.
(g) Counterparts. This Agreement may be signed in multiple counterparts, each of which shall be deemed an original. Any executed counterpart returned by facsimile shall be deemed an original executed counterpart.
(h) No Third Party Beneficiaries. Unless specifically provided herein, the provisions of this Agreement are for the sole benefit of the parties to this Agreement and are not intended to confer upon any person not a party to this Agreement any rights hereunder.
(i) Terms and Construction. Each party has cooperated in the drafting and preparation of this Agreement. The language in all parts of this Agreement shall be in all cases construed according to its fair meaning and not strictly for or against either party.
(j) Admissions. Nothing in this Agreement is intended to be, or will be deemed to be, an admission of liability by Employee or the Company to each other, or an admission that they or any of their agents, affiliates, or employees have violated any
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state, federal or local statute, regulation or ordinance or any principle of common law of any jurisdiction, or that they have engaged in any wrongdoing towards each other.
(k) Indemnification. Employee shall continue to be eligible for indemnification by the Company to the extent provided to other former Executives of the Company, as provided in the Company by-laws as currently in effect or as may be required by Delaware law.
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IN WITNESS WHEREOF, this Separation and Settlement Agreement and General Release bas been duly executed as of the Effective Date.
| /s/ KEVIN J. SMITH | Date: 2-23-04 | |||
| Kevin J. Smith | ||||
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Heidrick & Struggles International, Inc. | ||||||
| /s/ FRITZ E. FREIDINGER | Date: 2-13-04 | |||||
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By: | Fritz E. Freidinger | |||||
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Title: | General Counsel and Corporate Secretary | |||||
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Exhibit A
LETTER OF RESIGNATION
Board of Directors
Heidrick & Struggles International, Inc.
233 South Wacker Drive
Chicago, IL 60606-6303
Dear Sirs:
I hereby resign as Chief Financial Officer with Heidrick & Struggles International, Inc. (the “Company”) to become effective as of March 31, 2004, and acknowledge acceptance thereof by the Company. Effective immediately, I hereby resign each other officer, director and other position with the Company and any of its related entities. My resignation is in accordance with the terms of the Separation and Severance Agreement, dated February 13, 2004, and I hereby confirm that I have no claim for compensation for loss of office, save as set out in that Agreement.
| Very truly yours, |
| /s/ KEVIN J. SMITH |
| Kevin J. smith |
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Resignation acknowledged and accepted: | ||
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Heidrick & Struggles International, Inc. | ||
| By: | /s/ Illegible | |
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Its: | Secretary | |
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Exhibit B
EMPLOYEE RELEASE AND WAIVER
1. This document is attached to, is incorporated into, and forms a part of, a Separation and Settlement Agreement and General Release, dated February 13, 2004 (the “Agreement”) by and between Heidrick & Struggles International, Inc. (the “Company”) and Kevin J. Smith (the “Employee”). Except for (i) a Claim based upon a breach of the Agreement, (ii) a Claim which is expressly preserved by the Agreement, or (iii) a Claim duly filed pursuant to the group welfare and retirement plans of the Company, the Employee, on behalf of himself and the other Employee Releasors, releases and forever discharges the Company and the other Company Releasees from any and all Claims which the Employee now has or claims, or might hereafter have or claim, whether known or unknown, suspected or unsuspected (or the other Employee Releasors may have, to the extent that it is derived from a Claim which the Employee may have), against the Company Releasees based upon or arising out of any matter or thing whatsoever, from the beginning of time to the date affixed beneath Employee’s signature on this General Release and Waiver and shall include, without limitation, Claims (other than those specifically excepted above) arising out of or related to the Employment Agreement dated March 20, 2002 and Claims arising under (or alleged to have arisen under) (a) the Age Discrimination in Employment Act of 1967, as amended; (b) Title VII of the Civil Rights Act of 1964, as amended; (c) The Civil Rights Act of 1991; (d) Section 1981 through 1988 of Title 42 of the United States Code, as amended; (e) the Employee Retirement Income Security Act of 1974, as amended; (f) The Immigration Reform Control Act, as amended; (g) The Americans with Disabilities Act of 1990, as amended; (h) The National Labor Relations Act, as amended; (i) The Fair Labor Standards Act, as amended; (j) The Occupational Safety and Health Act, as amended; (k) The Family and Medical Leave Act of 1993; (1) any state antidiscrimination law; (m) any state wage and hour law; (n) any other local, state or federal law, regulation or ordinance; (o) any public policy, contract, tort, or common law; or (p) any allegation for costs, fees, or other expenses including attorneys’ fees incurred in these matters. Employee further represents that he has not, and never will, institute against the Company or any of the Company Releasees any action or other proceeding in any court, administrative agency, or other tribunal of the United States, any State thereof or any foreign jurisdiction, with respect to any Claim or cause of action of any type, other than as provided under (i), (ii) or (iii) above, arising or which may have existed at any time prior to the effective date of the Agreement. If Employee does institute such a claim, he agrees to pay the reasonable costs incurred by the Company or any of the Company Releasees in defending such action, including reasonable attorneys’ fees, experts’ fees and costs.
2. For purposes of this General Release and Waiver, the terms set forth below shall have the following meanings:
(a) The term “Agreement” shall include the Agreement and the Exhibits thereto.
(b) The term “Claims” shall include any and all rights, claims, demands, debts, dues, sums of money, accounts, attorneys’ fees, experts’ fees, complaints,
judgments, executions, actions and causes of action of any nature whatsoever, cognizable at law or equity.
(c) The term “Company Releasees” shall include the Company and its affiliates and their respective officers, directors, trustees, members, employees, shareholders, partners, assigns and administrators and fiduciaries under any employee benefit plan of the Company and of any affiliate, and insurers, and their predecessors and successors.
(d) The term “Employee Releasors” shall include the Employee, and his family, heirs, executors, representatives, agents, insurers, administrators, successors, assigns, and any other person claiming through the Employee.
3. The following provisions are applicable to and made a part of the Agreement and this General Release and Waiver:
(a) By this General Release and Waiver, the Employee Releasors do not release or waive any right or claim which they may have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act, which arises after the date of execution of this General Release and Waiver.
(b) In exchange for this General Release and Waiver, the Employee hereby acknowledges that he has received separate consideration beyond that to which he is otherwise entitled under the Company’s policies, under contract, or under applicable law.
(c) The Employee has consulted with an attorney of his choosing prior to executing the Agreement and this General Release and Waiver.
(d) The Employee has up to twenty-one (21) days from the date of presentment to consider whether or not to execute the Agreement and this General Release and Waiver which right the Employee has chosen to waive with the advice of counsel. In the event of such execution, the Employee has a further period of seven (7) days from the date of said execution in which to revoke said execution. The Agreement and this General Release and Waiver will not become effective until expiration of such revocation period.
4. The Agreement (including this General Release and Waiver and all other Exhibits to the Agreement), and the commitments and obligations of all parties thereunder:
(a) shall become final and binding immediately following the expiration of the Employee’s right to revoke the execution of the Agreement in accordance with paragraph 3(d) of this Exhibit B;
(b) shall not become final and binding until the expiration of such right to revoke; provided, however, that nothing contained herein shall confer any right upon the Company to revoke the Agreement; and
(c) shall not become final and binding if the Employee revokes such execution.
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The Employee hereby acknowledges that he has carefully read and understands the terms of the Agreement and this General Release and Waiver and each of his rights as set forth therein.
| Kevin J. Smith | ||
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Date: | ||