TRANSITION AGREEMENT
Exhibit 10.1
THIS TRANSITION AGREEMENT (this “Agreement”) is made and entered into on November 16, 2009
(the “Effective Date”) by and between Xxxxxxx X. Xxxxxxxx (“Xxxxxxxx”) and Fair Xxxxx Corporation
(the “Company”), a Delaware corporation.
BACKGROUND
X. Xxxxxxxx has been employed by the Company and currently serves as the Company’s Chief
Operating Officer, pursuant to a Letter Agreement, dated October 12, 2007, as amended on June 30,
2008 (the “Letter Agreement”).
B. The Company and Xxxxxxxx entered into an Amended and Restated Management Agreement dated
June 30, 2008 (the “Management Agreement”).
C. In connection with, and as a condition of the Letter Agreement, the Company and Xxxxxxxx
entered into a Proprietary Information and Inventions Agreement (the “PIIA”).
D. The Company and Xxxxxxxx have agreed that Xxxxxxxx will resign from his positions with the
Company on the terms set forth in this Agreement.
E. The parties are mutually concluding their employment relationship amicably, but mutually
recognize that such a relationship may give rise to potential claims or liabilities.
F. The parties desire to resolve issues between them and confirm the separation arrangements
under the Letter Agreement, and they have agreed to a full settlement of such issues, as set forth
in this Agreement.
NOW THEREFORE, in consideration of the mutual promises and provisions contained in this
Agreement, the Release and the Second Release referred to below, the parties, intending to be
legally bound, agree as follows:
AGREEMENTS
1. Employment Termination. Xxxxxxxx hereby confirms his resignation as an officer of the
Company as of the Effective Date. Xxxxxxxx further confirms his resignation as an employee of the
Company effective December 31, 2009, unless earlier terminated in accordance with paragraph 4
below. Xxxxxxxx’x last day of employment, whether on or before December 31, 2009, shall be
referred to herein as the “Separation Date.”
2. Release and Second Release by Xxxxxxxx. At the same time that Xxxxxxxx executes this
Agreement, he shall also execute a Release in the form attached to this Agreement as Exhibit A (the
“Release”), in favor of the Company and its affiliates, divisions, committees, directors, officers,
employees, agents, predecessors, successors and assigns. If Xxxxxxxx remains employed with the
Company through December 31, 2009, and, if on or within 21 days after the Separation Date Xxxxxxxx
executes and thereafter does not rescind in accordance with its terms a second release in the form
of Exhibit B (the “Second Release”), then Xxxxxxxx will be eligible for consideration under the
Letter Agreement as set out in paragraph 5 below. This Agreement will not be interpreted or
construed to limit the Release or the Second Release in any manner. The existence of any dispute
respecting the interpretation of this Agreement or the alleged breach of this Agreement will not
nullify or otherwise affect the validity or enforceability of the Release or the Second Release.
3. Transition Period.
a. Duties. For the period beginning on the Effective Date and ending on the
Separation Date (the “Transition Period”), Xxxxxxxx shall retain his current job title; however,
during the Transition Period, Xxxxxxxx’x responsibilities and duties shall be limited to such
duties as requested by the Company, which may include, without limitation, reasonably assisting
with ongoing matters on which he worked prior to the Transition Period, reasonably facilitating a
smooth transition of his prior responsibilities, and reasonably cooperating with the Company as set
forth in paragraph 12 below. Xxxxxxxx shall devote such time as is reasonably necessary to
complete his responsibilities hereunder during the Transition Period and be generally available to
the Company. Xxxxxxxx shall not act as an employee, contractor, consultant or in any other
capacity for any other entity other than the Company
during the Transition Period, except with the advance written consent of the Chief Executive
Officer of the Company.
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b. Compensation. During the Transition Period, Xxxxxxxx will continue to receive his
regular base salary at the same base salary rate in effect for Xxxxxxxx on the Effective Date, paid
in accordance with the Company’s regular payroll practices and schedule, and will participate in
other employee benefits programs and plans in accordance with the terms of such programs and plans;
provided, however, that as of the Effective Date Xxxxxxxx will not be eligible for (1) additional
equity grants, or (2) payment under any bonus or incentive plans or programs of the Company for the
2009 or 2010 fiscal years. For the avoidance of doubt, Xxxxxxxx shall continue to accrue vacation
time during the Transition Period and be paid for his accrued unused vacation time as of the
Separation Date.
4. Early Termination of Employment. Xxxxxxxx and the Company agree that Xxxxxxxx’x
employment with the Company will automatically terminate on December 31, 2009 without further
action by either party, except that his employment will end (and the Separation Date will be)
earlier if (a) Xxxxxxxx rescinds or attempts to rescind the Release, (b) Xxxxxxxx violates any
material written policy of the Company, or (c) the Company notifies Xxxxxxxx of his material breach
of the terms of this Agreement, the Release, or the PIIA and, if curable, such breach is not cured
by Xxxxxxxx within three (3) days of actual receipt by him of the Company’s notification to
Xxxxxxxx of the breach.
5. Second Release.
x. Xxxxxxxxx Benefits under Letter Agreement. If Xxxxxxxx (i) remains employed with
the Company through December 31, 2009, (ii) signs the Second Release in accordance with paragraph 2
above, (iii) does not rescind the Second Release in accordance with its terms, and (iv) has not
breached his obligations under this Agreement, the Release, the Second Release or the PIIA, then
the Company will provide Xxxxxxxx the following consideration, as provided for and in accordance
with the “Severance” paragraph of the Letter Agreement:
| (1) | The Company will pay Xxxxxxxx as xxxxxxxxx pay an amount equal to one (1) times the sum of (a) Xxxxxxxx’x annual base salary at the rate in effect on the Separation Date plus (b) the total incentive bonus payments paid to Xxxxxxxx within the twelve-month period preceding the Separation Date. |
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| (2) | The Company will, for a period of twelve months following the Separation Date, allow Xxxxxxxx to continue to participate in any insured group health and group life insurance plan or program of the Company (but not any self-insured medical expense reimbursement plan within the meaning of Section 105(h) of the Internal Revenue Code) at the Company’s expense, to the extent Xxxxxxxx is a participant in such plans as of the Separation Date; however, if participation in any such plan is barred, the Company will arrange to provide Xxxxxxxx with substantially similar insured coverage at its expense. Thereafter, any insurance continuation for which Xxxxxxxx is eligible will be at Xxxxxxxx’x expense. |
Any severance payable as set forth in paragraph 5.(a)(1) above will be paid to Xxxxxxxx in a lump
sum on the first day of the seventh month following Xxxxxxxx’x “separation from service” as
determined under Section 409A of the Internal Revenue Code, but not earlier than expiration of any
applicable rescission periods.
b. Acknowledgement of Severance Amount. Xxxxxxxx acknowledges that the consideration
provided for in paragraph 5.(a) is a restatement of the severance pay to which he is eligible under
the Letter Agreement and is not in addition to what is provided for in the Letter Agreement.
Xxxxxxxx and the Company agree that Xxxxxxxx did not earn any incentive bonus payments within the
twelve-month period preceding the Separation Date and that therefore any severance payable under
paragraph 5.(a)(1) will equal Xxxxxxxx’x annual base salary of $450,000.00.
6. Proprietary Information and Inventions Agreement. Xxxxxxxx acknowledges entering into
the PIIA as a condition of the Company’s entering into the Letter Agreement and Xxxxxxxx hereby
reaffirms his commitments and obligations under the PIIA. Nothing in this Agreement is intended to
modify, amend, cancel or supersede the PIIA in any manner, and the parties agree that the PIIA
continues in full force and effect now and following the Separation Date.
7. Equity-Based Interests. Xxxxxxxx agrees and acknowledges that the stock options,
restricted stock and restricted stock units listed on Exhibit C attached to this Agreement reflect
his only equity-
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based interests with the Company and that such equity-based interests will continue
in effect during the Transition Period and thereafter only to the extent reflected in the
applicable written stock option, restricted stock and/or restricted stock unit agreements and
plans.
8. Confidentiality. The provisions of this Agreement, the Release and the Second Release
(collectively “Confidential Separation Information”) will be treated by Xxxxxxxx as confidential.
Accordingly, Xxxxxxxx will not disclose Confidential Separation Information to anyone at any time,
except it will not be a violation of this Agreement for Xxxxxxxx to disclose Confidential
Separation Information to his immediate family, his attorneys, his accountants or tax advisors, or
his financial planners.
9. Indemnification. Notwithstanding Xxxxxxxx’x resignation as an officer of the Company or
termination of his employment upon the conclusion of the Transition Period, with respect to events
that occurred during his tenure as an employee or officer of the Company, Xxxxxxxx will be
entitled, as a former employee or officer of the Company, to the same rights that are afforded to
other current or former employees or officers of the Company, now or in the future, to
indemnification and advancement of expenses as provided in the charter documents of the Company and
under applicable law, and to indemnification and a legal defense to the extent provided from time
to time to current officers by any applicable general liability and/or directors’ and officers’
liability insurance policies maintained by the Company.
10. Records, Documents, and Property. Xxxxxxxx acknowledges and represents that he will
deliver to the Company on or before the Separation Date all Company records and any and all Company
property in his possession or under his control, including without limitation, manuals, books,
blank forms, documents, letters, memoranda, notes, notebooks, reports, printouts, computer disks,
computer tapes, data, tables, or calculations and all copies thereof, documents that in whole or in
part contain any trade secrets or confidential, proprietary, or other secret information of the
Company and all copies thereof, and
keys, access cards, access codes, source codes, passwords, credit cards, personal computers,
telephones, and other electronic equipment belonging to the Company.
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11. Non-disparagement. Xxxxxxxx will not disparage the reputation, character, image,
products, or services of the Company, or the reputation or character of the Company’s employees,
directors or officers. The Company will not authorize or encourage any employee of the Company to
disparage Xxxxxxxx’x reputation, image or character. Nothing in this Agreement is intended to
prevent or interfere with any party making any required or reasonable communications with, or
providing information to, any governmental, law enforcement, or stock exchange agency or
representative, or in connection with any governmental investigation, court, administrative or
arbitration proceeding.
12. Cooperation.
a. Agreement to Assist and Cooperate. At the Company’s reasonable request and upon
reasonable notice, Xxxxxxxx will, from time to time and without further consideration, during and
following the Transition Period, timely execute and deliver such acknowledgements, instruments,
certificates, and other ministerial documents (including without limitation, certification as to
specific actions performed by Xxxxxxxx in his capacity as an officer of the Company) as may be
necessary or appropriate to formalize and complete the applicable corporate records. In addition,
at the Company’s reasonable request and upon reasonable notice, Xxxxxxxx will, from time to time
and without further consideration, during and following the Transition Period discuss and consult
with the Company regarding business matters that he was directly and substantially involved with
while employed by or otherwise providing services to the Company.
b. Claims Involving the Company. Xxxxxxxx agrees that he will, at any future time, be
available upon reasonable notice from the Company, with or without subpoena, to be interviewed,
review documents or things, give depositions, testify, or engage in other reasonable activities in
connection with any litigation or investigation, with respect to matters that Xxxxxxxx has or may
have knowledge of by virtue of his employment by or service to the Company or any related entity.
In performing his obligations under this subparagraph 12.(b) to testify or otherwise provide
information, Xxxxxxxx will
honestly, truthfully, forthrightly, and completely provide the information requested. Xxxxxxxx
will comply with this Agreement upon notice from the Company that the Company or its attorneys
believe
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that his compliance would be helpful in the resolution of an investigation or the
prosecution or defense of claims. In the event that Xxxxxxxx’x services under this subparagraph
12.(b) exceed five (5) hours in any calendar month following the conclusion of the Transition
Period, the Company shall compensate Xxxxxxxx for such additional services at the hourly rate of
$200.00.
13. Taxes. The Company may take such action as it deems appropriate to insure that all
applicable federal, state, city and other payroll, withholding, income or other taxes arising from
any compensation, benefits or any other payments made pursuant to this Agreement, and in order to
comply with all applicable federal, state, city and other tax laws or regulations, are withheld or
collected from Xxxxxxxx. This Agreement is intended to satisfy or be exempt from the requirements
of Section 409A(a)(2), (3) and (4) of the Internal Revenue Code of 1986, as amended including
current and future guidance and regulations interpreting such provisions. Xxxxxxxx acknowledges
and agrees that the Company has made no assurances or representations to him regarding the tax
treatment of any consideration provided for in this Agreement and that the Company has advised him
to obtain his own personal tax advice. Except for any tax amounts withheld by the Company from the
payments or other consideration hereunder and any employment taxes required to be paid by the
Company, Xxxxxxxx shall be responsible for payment of any and all taxes owed in connection with the
consideration provided for in this Agreement.
14. Full Compensation. Xxxxxxxx understands that the payments and other consideration
provided by the Company under this Agreement will fully compensate Xxxxxxxx for and extinguish any
and all of the potential claims Xxxxxxxx is releasing in the Release or will release in the Second
Release, including without limitation, any claims for attorneys’ fees and costs and any and all
claims for any type of legal or equitable relief. The payments and other consideration provided
hereunder will be made in lieu of any further payments or compensation that Xxxxxxxx would
otherwise be entitled to receive as an employee of the Company.
15. No Admission of Wrongdoing. Xxxxxxxx understands that this Agreement does not
constitute an admission that the Company has violated any local ordinance, state or federal
statute, or principle of common law, or that the Company has engaged in any unlawful or improper
conduct toward Xxxxxxxx.
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Xxxxxxxx will not characterize this Agreement or the payment of any money
or other consideration in accordance with this Agreement as an admission that the Company has
engaged in any unlawful or improper conduct toward him or treated him unfairly.
16. Authority. Xxxxxxxx represents and warrants that he has the authority to enter into
this Agreement, the Release and the Second Release, and that no causes of action, claims, or
demands released pursuant to this Agreement, the Release or the Second Release have been assigned
to any person or entity not a party to this Agreement, the Release or the Second Release.
17. Legal Representation. Xxxxxxxx acknowledges that he has been advised by the Company to
consult with his own attorney before executing this Agreement, the Release and the Second Release,
that he has had a full opportunity to consider this Agreement, the Release and the Second Release,
that he has had a full opportunity to ask any questions that he may have concerning this Agreement,
the Release and the Second Release, or the settlement of his potential claims against the Company,
and that he has not relied upon any statements or representations made by the Company or its
attorneys, written or oral, other than the statements and representations that are explicitly set
forth in this Agreement, the Release, the Second Release, the PIIA Agreement, the Letter Agreement,
the stock option agreements between Xxxxxxxx and the Company and any qualified employee benefit
plans sponsored by the Company in which Xxxxxxxx is a participant.
18. Assignment. This Agreement is binding on Xxxxxxxx and on the Company and its
successors and assigns. The rights and obligations of the Company under this Agreement may be
assigned to a successor, including, but not limited to, a purchaser of all or substantially all of
the business or assets of the Company. No rights or obligations of Xxxxxxxx hereunder may be
assigned by Xxxxxxxx to any other person or entity.
19. Entire Agreement. This Agreement, the Release, the Second Release, the PIIA, the
Letter Agreement, any equity agreements between Xxxxxxxx and the Company, and any qualified
employee benefit plans sponsored by the Company in which Xxxxxxxx is a participant are intended to
define the full extent of the legally enforceable undertakings of the parties, and no promises or
representations, written
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or oral, that are not set forth explicitly in this Agreement, the Release,
the Second Release, the PIIA, the Letter Agreement, and the equity agreements between Xxxxxxxx and
the Company, or any qualified employee benefit plans sponsored by the Company in which Xxxxxxxx is
a participant are intended by either party to be legally binding. Except as specifically provided
herein, this Agreement supercedes any and all prior agreements or understandings between the
parties, including the Management Agreement which shall terminate and have no further force and
effect as of the Effective Date.
20. Dispute Resolution.
a. Jurisdiction and Venue. Xxxxxxxx and the Company consent to jurisdiction of the
courts of the State of Minnesota and/or the United States District Court, District of Minnesota,
for the purpose of resolving all issues of law, equity, or fact arising out of or in connection
with this Agreement, the Release or the Second Release. Any action involving claims of a breach of
this Agreement, the Release or the Second Release must be brought in such courts. Each party
consents to personal jurisdiction over such party in the state and/or federal courts of Minnesota
and hereby waives any defense of lack of personal jurisdiction or inconvenient forum. Venue, for
the purpose of all such suits in state court, will be in Hennepin County, State of Minnesota.
b. Waiver of Jury Trial. To the maximum extent permitted by law, Xxxxxxxx and the
Company waive any and all rights to a jury trial with respect to any dispute arising out of or
relating to this Agreement, the Release or the Second Release.
21. Headings. The descriptive headings of the paragraphs and subparagraphs of this
Agreement are inserted for convenience only and do not constitute a part of this Agreement.
22. Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which together will constitute
one and the same instrument.
23. Governing Law. This Agreement, the Release and the Second Release will be interpreted
and construed in accordance with, and any dispute or controversy arising from any breach or
asserted breach
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of this Agreement, the Release or the Second Release, will be governed by the laws
of the State of Minnesota.
IN WITNESS WHEREOF, the parties have executed this Transition Agreement on the date stated
below.
| Dated: November 16, 2009 | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Xxxxxxx X. Xxxxxxxx | ||||
| Dated: November 16, 2009 | FAIR XXXXX CORPORATION |
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| BY: | /s/ Xxxx X. Xxxxxx | |||
| Its: | Chief Executive Officer | |||
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