Exhibit 10.2
TRANSITION AGREEMENT
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THIS TRANSITION AGREEMENT ("Agreement") is entered into as of June
30, 2005, by and between Tumbleweed Communications Corp. (the "Company") and
Xxxxxxx X. Xxxxx ("Employee") (together the "Parties").
R E C I T A L S
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WHEREAS, Employee is currently employed by the Company as its
President, Chief Executive Officer and Chairman of the Company's Board of
Directors (the "Board");
WHEREAS, the Employee has elected to resign as the Company's
President, Chief Executive Officer and Chairman of the Company's Board of
Directors, and the Parties desire to memorialize the terms of Employee's
continuing service as a member of the Board and as a special advisor to the
Company's Chief Executive Officer; and
WHEREAS, the Parties desire to resolve, fully and finally, all
outstanding matters between them related to or arising in connection with
Employee's employment by, and separation from, the Company.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth hereinafter, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the Parties intending to be legally bound, hereby agree as follows:
AGREEMENT
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1. EMPLOYEE'S RESIGNATION AND POSITION ON THE BOARD.
Pursuant to this Agreement, Employee's resignation as the Company's President,
Chief Executive Officer and Chairman of the Company's Board of Directors shall
be effective as of 5:00 p.m. Pacific time on June 30, 2005 (the "Resignation
Date"). Employee shall continue as a member of the Board and as a special
advisor to the Chief Executive Officer for the period of two (2) years from
the Resignation Date (the "Transition Term"), subject to the terms and
conditions set forth below. During the Transition Term, Employee will provide
advisory services to the Company's Chief Executive Officer as requested. Upon
the expiration of the Transition Term and for as long as Employee continues to
serve as a member of the Board, the Company shall pay Employee the sum of
$100,000 per year ("Director Compensation") in addition to the standard
compensation package for Directors, and Employee's Company stock options shall
continue to vest in accordance with the terms and conditions of the option
plans under which such options were granted; provided, however, that the
Parties agree that the Director Compensation will be treated as 1099 income
for tax purposes and Employee will be responsible for payment of all federal,
state and local taxes with respect to such Director Compensation.
2. CONSIDERATION.
(a) In consideration of Employee's full waiver and release of all
claims and the other agreements and covenants contained herein, the Company
agrees to provide Employee with the following payments and benefits (the
"Consideration"):
i. During the Transition Term, in addition to the standard
compensation package for Directors, the Company shall pay Employee the sum of
$100,000 per year, on a semi-monthly basis, less all applicable tax
withholding;
ii. During the Transition Term, all Company stock options
granted to Employee shall continue to vest in accordance with the terms and
conditions of the option plans under which such options were granted and
Employee shall be permitted to exercise those options that continue vesting
for a period of ninety days following the end of the Transition Term;
iii. During the Transition Term, Employee and his eligible
dependants may continue to participate in the health and welfare employee
benefit plans offered by the Company, subject to the terms and conditions of
the applicable benefit plans, which are subject to change or termination by
the Company at any time; provided, however, that if the applicable benefit
plans do not allow the Employee and his eligible dependents to continue to
participate, the Company will reimburse for COBRA premiums for Employee and
his eligible dependents, payable when such premiums are due, provided Employee
elects to continue medical coverage under applicable law, for the Transition
Term;
iv. During the Transition Term, Employee continues to
participate in the outstanding loan forgiveness program; and
v. Employee shall retain his current Company issued laptop
computer and RIM Blackberry.
b. Employee acknowledges and agrees that the Company's agreement
to provide the Consideration constitutes payments and benefits beyond which he
would otherwise be entitled to but for the mutual covenants set forth in this
Agreement. Employee further acknowledges and agrees that the Consideration is
in addition to the Company's payment to him of all reimbursable Company
expenses and accrued wages and vacation pay earned through the Resignation
Date (the "Accrued Obligations").
c. Employee acknowledges and agrees that, except for the
Consideration and the Accrued Obligations, Employee shall not be entitled to
receive any other compensation or benefits of any sort including, without
limitation, salary, bonuses or any other form of compensation or benefits from
the Company or any of its officers, directors, employees, agents, insurance
companies, subsidiaries, successors or assigns at any time.
d. If a Change of Control as defined below, occurs during the
Transition Term, Employee will receive all Consideration through the
Transition Term and accelerated vesting with respect to 100% of the then
unvested portion of all outstanding equity awards. For all purposes under this
Agreement, "Change of Control" shall mean (i) a merger, reorganization,
consolidation or similar event, whether in a single transaction or in a series
of transactions (collectively the "Transaction") unless immediately following
such Transaction (and after giving effect to such Transaction) the Company's
stockholders immediately prior to the Transaction own at least 50% the total
combined voting power of the surviving or acquiring entity in substantially
the same proportions as their ownership of the voting power of the Company's
outstanding securities immediately before such Transaction; (ii) any person
(having the meaning ascribed to such term in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended ("1934 Act") and used in Sections 13(d) and
14(d) thereof, including a "group" within the meaning of Section 13(d)(3)) has
or acquires beneficial ownership (within the meaning of Rule 13d-3 under the
0000 Xxx) of at least 50% of the total combined voting power of the Company's
outstanding securities; (iii) the sale, transfer or other disposition of all
or substantially all of the Company's assets; or (iv) a complete liquidation
or dissolution of the Company.
3. RELEASE AND WAIVER.
a. In exchange for the Consideration, Employee and the Company, on
behalf of themselves, and their respective heirs, family members, executors,
past and present officers, directors, employees, investors, agents, attorneys,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations, and assigns, (collectively the "Released Parties")
hereby fully and forever release each other and their respective Released
Parties, from, and agree not to xxx concerning, any claim, duty, obligation or
cause of action relating to any matters of any kind, whether presently known
or unknown, suspected or unsuspected, that any of them may possess arising out
of or relating in any way to Employee's employment with, and separation from,
the Company or otherwise relating to any of the Released Parties up to the
effective date of this Agreement. This waiver and release specifically extends
to, without limitation, any and all claims or causes of action for wrongful
termination, breach of an express or implied contract, breach of the covenant
of good faith and fair dealing, breach of fiduciary duty, fraud,
misrepresentation, defamation, slander, infliction of emotional distress,
disability, loss of future earnings, and any claims under any applicable state
or federal constitution or state, federal or local statutes and regulations,
including, but not limited to, the Civil Rights Act of 1964, as amended, the
Fair Labor Standards Act, as amended, the Americans with Disabilities Act of
1990, as amended, the Rehabilitation Act of 1973, as amended, the Employee
Retirement Income Security Act of 1974, as amended, the Age Discrimination in
Employment Act of 1967, as amended ("ADEA"), the Worker Adjustment and
Retraining Notification Act, as amended, the Family and Medical Leave Act, as
amended, the California Fair Employment and Housing Act, as amended, the
California Family Rights Act or California Labor Code ss.1400 et. seq.
b. For the purpose of implementing a full and complete release,
the Parties understand and agree that this Agreement is intended to include
all claims, if any, which the Parties may have and which the Parties do not
now know or suspect to exist in their favor against the Released Parties and
this Agreement extinguishes those claims. Accordingly, each of Employee and
the Company expressly waives all rights afforded by Section 1542 of the Civil
Code of the State of California ("Section 1542"). Section 1542 states as
follows:
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.
4. REPRESENTATIONS. Employee makes the following representations,
each of which is an important consideration to the Company's willingness to
enter into this Agreement with Employee:
a. Employee acknowledges that the Company is not entering into
this Agreement because it believes that Employee has any cognizable legal
claim against the Released Parties. If Employee elects not to sign this
Agreement, the fact that this Agreement was offered will not be understood as
an indication that the Released Parties believed Employee was treated
unlawfully in any respect.
b. Employee acknowledges that, prior to signing this Agreement, he
read and understood each and every provision in this Agreement and that he had
the opportunity to consult with an attorney regarding the effect of each and
every provision of this Agreement. Employee further acknowledges that he
knowingly and voluntarily entered into this Agreement with complete
understanding of all relevant facts, and that he was neither fraudulently
induced nor coerced to enter into this Agreement.
c. Employee represents and warrants that, as of the Resignation
Date, and except as provided in Section 2(a)(v) above, he will return to the
Company all documents, data, records, equipment and other physical property
that came into his possession during his employment and which was acquired
from the Company, including, without limitation any confidential or
proprietary information, as defined in the Company's Proprietary Information
and Inventions Agreement, and that any such confidential or proprietary
information as came into Employee's possession during his employment with the
Company and is in electronic or other intangible form and is retained other
than on electronic or other systems in the possession and control of the
Company has been permanently destroyed.
5. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Parties
hereby agree that, after the Resignation Date, except as specifically provided
below, the Proprietary Information and Inventions Agreement Employee signed as
of February 1, 1993 ("Proprietary Information Agreement") will no longer be in
force and effect; provided, however, that Sections 1(a) and 3 of the
Proprietary Information Agreement will continue to remain in effect pursuant
to their terms, except that Employee may solicit any client or customer with
Personal Work Product, as defined in Section 15, after obtaining permission
from the Board to do so.
6. CONFIDENTIAL SEPARATION. Employee shall not discuss the terms of
this Agreement with any person without the written consent of the Company or
its successors and assigns, except with his legal and tax advisors and members
of his immediate family, or to the extent required by law.
7. GOVERNING LAW. This Agreement and all rights, duties and remedies
hereunder shall be governed by and construed and enforced in accordance with
the laws of the State of California, without reference to its choice of law
rules.
8. ARBITRATION. Except for an action exclusively seeking injunctive
relief, any disagreement, claim or controversy arising under or in connection
with this Agreement or otherwise arising out of Employee's employment with, or
separation from, the Company shall be settled exclusively by arbitration
before a single arbitrator in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association (the
"Rules"), provided that, the arbitrator shall allow for discovery sufficient
to adequately arbitrate any claims, including access to essential documents
and witnesses; provided further that, the Parties will be entitled to any and
all relief available under applicable law and the Rules shall be modified by
the arbitrator to the extent necessary to be consistent with applicable law.
The arbitration shall take place in Redwood City, California. The written
decision of the arbitrator, which shall include findings of fact and
conclusions of law, shall be enforceable in any court of competent
jurisdiction and shall be binding on the Parties hereto. The arbitrator shall
be entitled to award reasonable attorneys' fees to the prevailing party in any
arbitration or judicial action under this Agreement, consistent with
applicable law. The Company and Employee each shall pay its or her own
attorneys' fees in any such arbitration, provided however, that the Company
shall pay for any administrative or filing fees, including the arbitrator's
fee, that Employee would not have otherwise incurred if the dispute was
adjudicated in a court of law, rather than through arbitration.
9. LEGAL EXPENSES. The Company will reimburse Employee for reasonable
legal fees incurred by him in connection with the negotiation, preparation,
and execution of this Agreement.
10. SUCCESSORS AND ASSIGNS. Employee agrees that this Agreement will
be binding upon, and pass to the benefit of, the successors and assigns of the
Company.
11. NO WAIVERS; AMENDMENTS. The failure of the Parties to enforce any
of its terms, provisions or covenants shall not be construed as a waiver of
the same or of the right of such party to enforce the same. Waiver by the
Company of any breach or default by Employee of any term, provision or
covenant of this Agreement shall not operate as a waiver of any other breach
or default by Employee. This Agreement may not be amended or modified other
than by a written instrument signed by an authorized representative of the
Company and Employee.
12. DESCRIPTIVE HEADINGS. The section headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
14. ENTIRE AGREEMENT. Together with Sections 1(a) and 3 of the
Proprietary Information Agreement, this Agreement sets forth the entire
agreement and understanding of the Parties relating to the subject matter
hereof and merges and supersedes all prior discussions, agreements and
understandings of every kind and nature between the Parties and neither party
shall be bound by any term or condition other than as expressly set forth
herein or provided for in Sections 1(a) and 3 of the Proprietary Information
Agreement and the applicable option plans and agreements.
15. OUTSIDE BUSINESS ENDEAVORS. The Parties hereby acknowledge and
agree that Employee has pursued the development of certain intellectual work
product without the use of Company equipment, supplies, facilities and trade
secrets or other proprietary or confidential information ("Personal Work
Product"), and Employee wishes to continue the development of such Personal
Work Product independent of the Company. Employee represents that a summary
description of the Personal Work Product as currently contemplated and its
proposed application are set forth on Schedule A hereto. The Parties further
acknowledge and agree that the Personal Work Product, as it is represented to
currently exist, as well as any similarly created subsequent version,
revision, augmentation, or related technology is covered by the exceptions to
assignability under Section 2870 of the California Labor Code. The Company
further disclaims any right, title or interest, including, without limitation,
trade secrets, copyrights, and rights to royalty or license payments, in or
related to the Personal Work Product and the Company acknowledges that it has
no claim, on account of Employee's former employment relationship with the
Company or otherwise, for damages, liability, loss, injunction or otherwise
arising from any alleged or actual breach of contract arising from or related
to the Personal Work Product.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth above.
TUMBLEWEED COMMUNICATIONS CORP. EMPLOYEE
By:
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Xxxxxxx X. Xxxxx
Its:
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