EXHIBIT 10.16
CONSULTING AND SETTLEMENT AGREEMENT
THIS CONSULTING AND SETTLEMENT AGREEMENT ("Agreement") is entered into
between Xxxxx Xxxxxx (the "Employee") and XXXX, XXXXXX & ASSOCIATES, INC., a
California Corporation (the "Company").
WHEREAS, the Employee has been employed by the Company; and
WHEREAS, the Employee wishes to resign from the Company as its Chief
Financial Officer, effective December 31, 1996 (the "Termination Date"); and
WHEREAS, the Employee and the Company wish to provide for an interim period
in which Employee will continue to provide services to the Company and to enable
Employee to continue to vest in his Incentive Stock Option (granted to him on
August 15, 1995) through August 15, 1997, and to completely and amicably resolve
any actual and potential disputes between them;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Employee and the Company agree as follows:
1. Consulting Period.
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(a) Subject to the provisions of this Section 1 and Section 6, from
January 1, 1997 to May 16, 1997, the Employee shall continue to work for at
least 40 hours per week for the Company providing reasonable and customary
whatever services the Company and its management may require, subject to the
review of the Company's Chief Executive Officer and Chief Financial Officer, and
the Company shall pay the Employee $13,333 a month in accordance with its normal
payroll procedures, subject to withholding for applicable payroll taxes.
Effective May 16, 1997, the Employee shall resign from the Company.
(b) Provided that Employee has continuously provided services to the
Company to the sole satisfaction of the Chief Executive Officer through May 15,
1997 pursuant to the provisions of Section 1(a) of this Agreement, the Employee
shall be asked to serve as a part-time consultant to the Company, from May 16,
1997 through August 16, 1997, and shall be available to the Company for a
minimum of 10 hours per week. The Company shall pay the Employee $3,333 a week
for his consulting services, subject to applicable withholding provisions. The
period during which the Employee shall serve the Company pursuant to Section
1(a) and 1(b) of this Agreement shall be known as the Consulting Period.
Employee's employment hereunder during the Consulting Period may be terminated
by Employee at any time, for any reason, with or without cause.
The Company may only terminate the Consulting Period for "cause" as defined
in Section 2. In the event the Company elects to not utilize, or does not
require, the services of the Employee as specified in 1(a) and 1(b) above, for
all or any part of the Consulting Period it will not be considered as "cause"
for purposes of Section 2.
2. Options. Provided that Employee continues to provide services to the
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Company pursuant to Section 1(a) and 1(b) above and is not terminated for
"Cause" as defined below, the Employee's incentive stock option which was
granted to the Employee on August 15, 1995, pursuant to the Company's 1995
Incentive Stock Option Plan shall continue to vest during the Employee's
Consulting Period. Cause shall mean a) Employee's failure to perform his duties
during the Consulting Period in a reasonably satisfactory fashion after receipt
of a written warning; b) Employee's engaging in misconduct that is materially
injurious to the Company; c) Employee's being convicted of a felony; d)
Employee's material breach of this Agreement; e)
Employee's commission of an act of fraud against, or the misappropriation of
property belonging to, the Company; or f) Employee's breach of any
confidentiality or proprietary information agreement between Employee and the
Company. Should the Employee exercise this stock option more than three months
after May 16, 1997, such stock option shall be exercisable as a non-statutory
stock option. This Agreement shall amend any prior provision of the Company's
1995 Incentive Stock Option Plan or option agreement by and between the Company
and the Employee.
3. Release. The Employee hereby releases and forever discharges the
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Company and each of its past and present directors, managers, officers,
shareholders, agents, consultants, advisers, employees, attorneys, servants,
parents, subsidiaries, employee benefit plans, predecessors, successors and
assigns (the "Releasees"), and each of them separately and collectively, from
any and all claims, liens, demands, causes of action, obligations, damages and
liabilities of any nature whatsoever, known or unknown, that the Employee ever
had, now has or may hereafter claim to have against the Releasees, with respect
to any matter arising out of or connected with the Employee's employment with
the Company or the termination of that employment, including (but not limited
to) claims of wrongful discharge; intentional or negligent infliction of
emotional distress; mental, physical or emotional injuries sustained from
invasion of privacy; any physical or mental harm or distress from such
employment or from termination of such employment; defamation; breach of
contract; breach of the covenant of good faith and fair dealing; interference
with prospective economic advantage; and any claims of discrimination based on
sex, age, race, national origin, or on any other basis, under all laws and
regulations relating to employment including (without limitation):
(a) Any and all claims under federal or California statutory or
decisional law pertaining to wrongful discharge, discrimination, or breach
of public policy, including Title VII of the Civil Rights Act of 1964, as
amended, and the California Fair Employment and Housing Act;
(b) Any and all claims under the federal Age Discrimination in
Employment Act of 1967;
(c) Any and all claims for employee benefits, compensation, severance
payments, fringe benefits, group insurance, vacation or disability
payments, or stock or stock options; and
(d) Any and all claims relating to the tax obligation for which the
Employee may become liable as a result of this Agreement or the payment of
consideration referred to above.
This Agreement covers only those claims that arose prior to the execution
of this Agreement. Execution of this Agreement does not bar any claim that
arises thereafter, including (but not limited to) claims for breach of this
Agreement.
4. Waiver. The parties expressly waive all rights under Section 1542 of
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the Civil Code of California, which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
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The parties agree that the possibility that such unknown claims exist was taken
into account in determining the amount of consideration to be paid for the
giving of this Agreement.
5. Covenant Not To Xxx. The parties covenant and agree that they will
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never, individually or with any person or in any way, commence, aid in any way,
except as required by due legal process, prosecute or cause or permit to be
commenced or prosecuted, any action or other proceeding based upon any claim
which is the subject of this Agreement. This Agreement shall be deemed breached
and a cause of action shall be deemed to have accrued immediately upon the
commencement or prosecution of any action or proceeding contrary to this
Agreement.
In the event of any breach of this Section 5, the aggrieved Releasee shall
be entitled to recover not only the amount of judgment which may be awarded
against such Releasee, but also all such other damages, costs and expenses as
may be incurred by such Releasee, including court costs, attorneys' fees and all
costs and expenses, taxable or otherwise, in preparing the defense of or
defending against, or seeking or obtaining an abatement of or injunction
against, any action or proceeding brought in violation of this Section 5 and in
prosecuting any claim, counterclaim or cross-claim based hereon.
6. Non-Competition. The Employee shall not engage in Competitive
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Activities during the Consulting Period.
(a) Competitive Activities. The Employee will be deemed to be engaged
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in Competitive Activities if during the Consulting Period the Employee,
directly or indirectly, engages in any business or activity in which the
Company or any subsidiary of the Company is engaged ("Competitive
Businesses") or is employed by, render services of any kind to, advise or
receive compensation in any form from, or invest or participate in any
manner or capacity in, any entity or person which directly or indirectly
engages in a Competitive Business.
(b) Exception. Subsection (a) above shall not preclude investments
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in a corporation whose stock is traded on a public market and of which the
Employee owns less than one percent.
(c) Purpose of Restrictions. It is agreed by the Employee and the
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Company that the restrictions contained in Subsection (a) above are
reasonable and necessary to protect the confidentiality of the customer
lists and trade secrets, and other confidential information concerning the
Company, acquired by the Employee.
(d) Modification by Court. If any of the restrictions contained in
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Subsection (a) above is determined to be unenforceable because of the
duration of such restrictions or the area covered thereby, then the court
making the determination shall have the power to reduce the duration of
such restrictions and/or the area covered thereby, and such restrictions,
in their reduced form, shall be enforceable.
7. No Assignment; Authority. The parties represent and warrant that no
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other person had or has or claims any interest in the claims referred to in
Section 4 above; that they have the sole right and exclusive authority to
execute this Agreement; that they have the sole right to receive the
consideration paid therefor; and that they have not sold, assigned, transferred,
conveyed or otherwise disposed of any claim or demand relating to any matter
covered by this Agreement.
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8. No Admission. The parties acknowledge that the payment of
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consideration, referred to herein, is made solely for the purpose of purchasing
peace and eliminating possible involvement in protracted litigation based upon
disputed claims that the other could make and does not constitute an admission
or concession of any liability on account of any of said claims, liability for
which is expressly denied by all Releasees.
9. Confidentiality. The parties covenant and agree to maintain the
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confidentiality of the existence and terms of this Agreement, including (without
limitation) the nature and payment of consideration referred to in this
Agreement and to make no voluntary statement concerning this Agreement, except
as may be necessary for the purposes of audit, tax returns or other disclosures
required by law.
10. Continued Confidentiality. The Employee acknowledges that the
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Employee possesses and will continue to possess information that has been
created, discovered, developed or otherwise become known to the Company or in
which property rights have been assigned or otherwise conveyed to the Company,
which information has commercial value in the business in which the Company is
engaged. All such information is hereinafter called "Proprietary Information."
By way of illustration, but not limitation, Proprietary Information includes
processes, formulas, codes, data, programs, know-how, improvements, discoveries,
developments, designs, inventions, techniques, marketing plans, strategies,
forecasts, new products, unpublished financial statements, budgets, projections,
licenses, prices, costs, contracts and customer and supplier lists.
In consideration of the compensation received by the Employee from the
Company and the covenants contained in this Agreement, the Employee agrees as
follows:
(a) All Proprietary Information is and shall continue to be the sole
property of the Company and its assigns, and the Company and its assigns
are and shall continue to be the sole owner of all rights in connection
therewith. The Employee will keep in strictest confidence and trust all
Proprietary Information and will not use or disclose any Proprietary
Information without the written consent of the Company.
(b) All documents, records, equipment and other physical property,
whether or not pertaining to Proprietary Information, furnished to the
Employee by the Company or produced by the Employee or others in connection
with the Employee's employment with the Company shall be and remain the
sole property of the Company. The Employee has returned to the Company all
documents, notes, drawings, specifications, programs, data, customer lists
and other materials of any nature pertaining to the Employee's work with
the Company, including any copies of such materials, and the Employee will
not use any of the foregoing, any reproduction of any of the foregoing, or
any Proprietary Information that is embodied in a tangible medium of
expression.
(c) The Employee agrees that the Company has the right to inform
subsequent employers about the Employee's obligation to maintain the
confidentiality of the Company's Proprietary Information.
(d) The Proprietary Information and Inventions Agreement between the
Employee and the Company shall remain in full force and effect.
11. No Disparagement. The Parties agrees that during the Consulting
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Period, and for one year thereafter, the Parties will not make any disparaging
statements concerning each other including the Employee, the Company or its past
or present directors, managers, officers, shareholders, agents, consultants,
advisers or employees.
The Company agrees to provide prospective future employers of Employee
with a favorable reference as to Employee's performance.
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12. Binding Effect. This Agreement shall bind all heirs, executors,
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administrators, successors and assigns of the Employee. It shall inure to the
benefit of each Releasee and, in addition, all heirs, executors, administrators
and assigns of each Releasee who is an individual.
13. Older Workers' Benefit Protection Act. The Employee acknowledges that
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the Employee is aware that under the Older Workers' Benefit Protection Act the
Employee has twenty-one (21) calendar days to decide whether to enter into this
Agreement. The Employee agrees that the Employee was offered twenty-one (21)
calendar days after receipt of this Agreement to review and consider this
Agreement and to discuss the Agreement with an attorney of the Employee's own
choosing. The Employee further acknowledges that the Employee is aware that
under the Older Workers' Benefit Protection Act the Employee may revoke this
Agreement within seven (7) calendar days after it is signed. The Employee
further agrees that the Employee is aware that in the event the Employee timely
exercises the right of rescission the Employee will have no rights under this
Agreement.
14. Dispute Resolution. The Employee and the Company agree that any
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future disputes between them, including (but not limited to) disputes arising
out of or related to this Agreement, shall be resolved by binding arbitration in
San Francisco, California.
(a) The party claiming to be aggrieved shall furnish to the other
party a written statement of the grievance identifying any witnesses or
documents that support the grievance and the relief requested or proposed.
(b) If the other party does not agree to furnish the relief requested
or proposed, or otherwise does not satisfy the demand of the party claiming
to be aggrieved, the parties shall submit the dispute to binding
arbitration.
(c) The parties shall attempt to agree to the identity of an
arbitrator, and, if they are unable to do so, the Company shall provide the
Employee with a list of no fewer than five names of arbitrators, each of
whom has been appointed in at least 10 cases, excluding cases in which the
Company has been involved, and the Employee shall pick a name from that
list. The arbitrator shall have the authority to determine whether the
conduct complained of under Subsection (a) above violates the rights of the
complaining party and, if so, to grant any relief authorized by law;
provided, however, that nothing herein shall limit the right of the Company
to obtain injunctive relief for violation of the Proprietary Information
and Inventions Agreement or Section 10. The arbitrator shall not have the
authority to modify, change or refuse to enforce the terms of this
Agreement.
(d) The hearing shall be transcribed. The Company shall bear the costs
of the arbitration, if the Employee prevails. If the Company prevails, the
Employee will bear the costs of the arbitration. Each party shall be
responsible for paying its own attorneys' fees.
(e) Except as provided in Subsection (c) above with respect to claimed
violations of the Proprietary Information and Inventions Agreement or
Section 10, arbitration shall be the exclusive and final remedy for any
dispute between the parties, and the parties agree that no dispute shall be
submitted to arbitration where the party claiming to be aggrieved has not
complied with the preliminary steps provided for above.
15. Severability. If any term of this Agreement is held to be invalid,
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void or unenforceable, the remainder of this Agreement shall remain in full
force and effect and shall in no way be affected, and the parties shall use
their best efforts to find an alternative way to achieve the same result.
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16. Entire Agreement. The Employee warrants that no promise, inducement
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or agreement not expressed herein has been made in connection with this
Agreement; that this Agreement constitutes the entire agreement between the
Employee and the Company; and that this Agreement cancels and supersedes all
prior communications or understandings between the Company and the Employee with
respect to the subject matter of this Agreement. The Employee has entered into
this Agreement freely and voluntarily. All executed copies are duplicate
originals, equally admissible in evidence. This Agreement may only be varied or
modified by a written document executed by the Employee and the Company.
17. Governing Law. This Agreement shall be construed and enforced
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pursuant to the laws of the State of California (other than their choice-of-law
provisions).
The Employee acknowledges that he has read and understand the foregoing
Agreement and that he signs this Agreement voluntarily, with full appreciation
that he is forever foreclosed from pursuing any of the rights he has released
and discharged pursuant to this Agreement.
Dated: February 28, 1997 /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
XXXX, XXXXXX & ASSOCIATES INC.
Dated: February 28, 1997 By: /s/ Xxxxxx Xxxx
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Its: CEO
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