SEVERANCE SETTLEMENT AGREEMENT
AND RELEASE OF CLAIMS
THIS SEVERANCE SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS ("Agreement)
is made and entered into between and among XXXXX X. XXXXXX ("Xxxxxx") and
PEREGRINE SYSTEMS, INC. ("PEREGRINE").
RECITALS
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X. Xxxxxx was an employee and a Director of PEREGRINE until his
resignation on October 23, 1995, from all such positions and from any and all
other positions he may have held with PEREGRINE and any of its foreign or
domestic affiliates or subsidiaries.
B. PEREGRINE and Xxxxxx are parties to an Option Agreement dated
December 7, 1990 pursuant to which Xxxxxx was granted the right to acquire
100,000 shares of PEREGRINE's Common Stock (the "First Option Agreement"); an
Option Agreement dated December 7, 1990 pursuant to which Xxxxxx was granted
the right to acquire 50,000 shares of Common Stock (the "Second Option"); an
Option Agreement dated March 19, 1991 pursuant to which Xxxxxx was granted an
option to purchase 50,000 shares of Common Stock (the "Third Option"); and an
Option Agreement dated December 2, 1991 pursuant to which Xxxxxx was granted
an option to purchase 100,000 shares of Common Stock (the "Fourth Option").
The First Option, Second Option, Third Option, and the Fourth Option are
referred to collectively herein as the "Xxxxxx Options". The number of
shares issuable upon exercise and the exercise price of each of the Xxxxxx
Options was subsequently adjusted in connection with PEREGRINE's
reincorporation into the State of Delaware such that 150,000 shares of Common
Stock are now subject to issuance upon exercise of the First Option at an
exercise price of $ 1.01 per share, 75,000 shares of Common Stock are now
subject to issuance upon exercise of the Second Option at an exercise price
of $1.01 per share, 75,000 shares are now subject to issuance upon exercise
of the Third Option at an exercise price of $2.67 per share, and 150,000
shares are now subject to issuance upon exercise of the Fourth Option at an
exercise price of $2.67 per share.
C. In connection with his resignation, Xxxxxx and PEREGRINE have
discussed certain terms and conditions relating to the termination of the
employment relationship and the commencement of a consulting relationship.
D. It is the intent of the parties in entering this Agreement to set
forth all agreements between the parties and resolve all pending matters
between the parties.
NOW, THEREFORE, in consideration of the promises and mutual agreements
hereinafter set forth, it is hereby agreed by and among the parties as
follows:
I. Compensation to Xxxxxx.
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1.1 $120,000 Advance. Xxxxxx has previously been advanced by PEREGRINE
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the sum of $120,000 to facilitate his possible relocation in connection with
certain business affairs of the Skunkware Division. In addition, PEREGRINE
has "grossed up" such $120,000 sum by an amount sufficient to permit the
$120,000 sum to be received by Xxxxxx without reduction for federal and state
income taxes. Upon execution hereof, Xxxxxx'x obligation to repay such
advance shall be canceled and of no further force and effect.
1.2 Xxxxxx Options. Notwithstanding any provision of the Xxxxxx
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Agreements to the contrary, Xxxxxx and PEREGRINE agree that as of October 23,
1995, all vesting of each of the Xxxxxx Options ceased. Section 2 of the
Xxxxxx Options are hereby amended such that the First Option shall be
exercisable for 150,000 shares at an exercise price of $1.01 per share; the
Second Option shall be exercisable for 75,000 shares at an exercise price of
$1.01 per share; the Third Option shall be exercisable for 75,000 shares at
an exercise price of $2.67 per share; and the Fourth Option shall be
exercisable for 112,500 shares at an exercise price of $2.67 per share.
Section 2 of the Xxxxxx Options are further amended such that they shall
remain exercisable until the first to occur of (i) October 23, 2000; or (ii)
breach by Xxxxxx of his obligations under this Agreement, including
specifically, but without limitation, his obligations under Section 1.3.6
hereof
1.3 Consulting Agreement.
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1.3.1 Xxxxxx agrees to act as a consultant to PEREGRINE and shall
provide such advice and assistance to PEREGRINE as the Chairman of the Board
shall reasonably request. Such advice and assistance shall include without
limitation cooperation in responding to requests for testimony, documentation
or other information and analysis relating to any litigation now pending,
threatened, or in the future arising against PEREGRINE and relating to
actions or events occurring during Xxxxxx'x tenure as an employee, director
or officer of PEREGRINE.
1.3.2 The term of such consultancy shall commence on the date
hereof and shall continue for a period of one year.
1.3.3 PEREGRINE agrees to pay Xxxxxx, on the fifth (5th) day of
each month during the consultancy term, the gross sum of Ten Thousand Dollars
($10,000).
1.3.4 Xxxxxx will not accrue any vacation benefits or participate
in any benefit plans as a result of this consulting arrangement.
1.3.5 PEREGRINE shall be under no obligation to provide Xxxxxx with
an office or secretarial assistance during the term of his consultancy.
1.3.6 Xxxxxx acknowledges that in the course of his prior employment
with PEREGRINE, and during the term of his consultancy, he has become and
will continue to be familiar with PEREGRINE's trade secrets and with other
confidential information concerning PEREGRINE and is affiliates and
subsidiaries. Therefore, Xxxxxx agrees that, during the initial one year
term of his consultancy and any renewal term, and for one (1) year
thereafter, he shall not, directly or indirectly, or through another entity,
undertake any conduct, or induce or attempt to induce any other person or
entity to undertake any conduct, not in the best interest of PEREGRINE.
PEREGRINE reserves the right to determine, at the sole discretion of its
Board of Directors as comprised at the time of such determination, whether
the conduct at issue is in the best interest of PEREGRINE. A breach of the
obligations in this Section 1.3.6 by Xxxxxx shall cause immediate termination
of the Xxxxxx Options.
1.4 Xxxxxx House.
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1.4.1 Xxxxxx and his wife have executed and notarized a quitclaim
deed in the form attached hereto as Exhibit A, and pursuant thereto quitclaim
their entire right, title and interest in and to the residential property
located at 00000 Xxxxx Xxxxxx, xx Xxxxxx Xxxxx Xx, Xxxxxxxxxx (the
"Property"), in full satisfaction of a loan in the amount of $454,331.67
(plus accrued interest), previously advanced by PEREGRINE to Xxxxxx in
connection with Xxxxxx'x purchase of the Property. Xxxxxx acknowledges that
he will have and be responsible for taxable income in connection with such
quitclaim action.
1.4.2 PEREGRINE shall assume and take such action as may be
necessary to put into its name thecurrent mortgage on the Property owed to
Chase Manhattan Bank; until such action has been completed, PEREGRINE agrees
to deposit in Xxxxxx'x account at Xxxxx Fargo Bank not later than the first
day of each month, the amount of the monthly mortgage payment, and Xxxxxx
agrees to leave in place instructions to Xxxxx Fargo Bank to provide for
automatic transfer of such amount to the mortgagor. Xxxxxx acknowledges that
PEREGRINE has already reimbursed Xxxxxx for mortgage payments of $33,114.44
which were due and paid for by Xxxxxx on or after September 1, 1995.
1.4.3 The parties acknowledge that the Property is currently listed
for sale. Until the first to occur of (i) the Property being sold, or (ii)
December 31, 1995, Xxxxxx may live in the house on the Property on a
cost-free month-to-month tenancy, provided, that notwithstanding anything to
the contrary in the attached Lease, Xxxxxx shall vacate the property on 30
days notice, shall return all office furniture which is in the house at the
direction of Peregrine, and shall leave the house in a clean and satisfactory
condition. "Cost-free" as used herein, shall mean free of rent and shall
further mean that PEREGRINE shall pay for all insurance, property taxes,
utilities, repairs and other home operating expenses during his tenancy.
Xxxxxx acknowledges that he will have and be responsible for taxable income
in connection with such cost-free tenancy.
II. General Release of Claims.
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2.1 Nothing contained in this Section 2 shall release or diminish
Xxxxxx'x obligations set forth in Section I of this Agreement.
2.2 Xxxxxx, for himself, his wife, and for his heirs, assigns,
executors, affiliates, successors and each of them hereby acknowledges full
and complete satisfaction of and releases and forever discharges PEREGRINE,
its subsidiary corporations, affiliates, and any and all of its past or
present owners, officers, directors, agents, shareholders, employees,
attorneys, heirs, assigns, executors, administrators and successors
(hereinafter collectively referred to as "PEREGRINE") from any and all
claims, demands, actions, causes of action, in law or in equity, suits,
liabilities, demands, losses, costs or expenses known or unknown, suspected
or unsuspected, of any kind or nature that Xxxxxx now has or may have against
PEREGRINE related to any occurrences, affairs and transactions between them
to the date of this Agreement, including costs, expenses and attorneys' fees.
This full and complete release includes, but is not limited to, claims
relating to Xxxxxx'x employment with PEREGRINE. Xxxxxx reserves, and by this
sentence expressly excepts from this release, Xxxxxx'x right to seek
indemnification from PEREGRINE against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding initiated by a third-party against Xxxxxx for Xxxxxx'x
authorized conduct within the scope of his employment, including acts of
omission and commission, during his employment by PEREGRINE.
2.3 Xxxxxx acknowledges that he is aware of and is familiar with the
provisions of Section 1542 of the California Civil Code which provides 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.
Xxxxxx hereby waives and relinquishes all rights and benefits which he
may have under Section 1542 of the California Civil Code, or the law of any
other state or jurisdiction, or common law principle, to the same or similar
effect.
2.4 Xxxxxx acknowledges that he may discover facts or law different
from, or in addition to, the facts or law that he knows or believes to be
true with respect to the claims released in this Agreement and agrees,
nonetheless, that this Agreement and the releases contained in it shall be
and remain effective in all respects notwithstanding such different or
additional facts or the discovery of them.
2.5 Xxxxxx declares and represents that he is executing this Agreement
with full advice from his legal counsel, and that he intends that this
Agreement shall be complete
subject to any claim of mistake, and that the release herein expresses a full
and complete release and, regardless of the adequacy or inadequacy of the
consideration, be intends the release herein to be final and complete.
Xxxxxx and PEREGRINE execute this release with the full knowledge that this
release covers all possible claims, except as provided in Section 2.1 above,
and the right to enforce the provisions of this Agreement as set forth herein.
2.6 Xxxxxx irrevocably and absolutely agrees that he will not prosecute
nor allow to be prosecuted on his behalf, in any administrative agency,
whether federal, state or local, or in any court, whether federal, state or
local, any claim or demand of any type related to the matters released in
this Agreement, it being his intention that with the execution of this
Agreement, PEREGRINE (as defined above) will be absolutely, unconditionally
and forever discharged of and from all obligations related in any way to the
matters discharged herein, subject only to the exception in Section 2.1 above.
III. General Provisions.
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3.1 Xxxxxx further agrees that he shall not directly or indirectly
disclose or use any trade secrets or other confidential or proprietary
information of PEREGRINE which came into, or will come into, Xxxxxx'x
possession during his employment and/or consulting relationship with
PEREGRINE; provided, that confidential information shall not include any
information known generally to the public, generally known to the industry or
in the public domain.
3.2 Xxxxxx and PEREGRINE agree that the terms and conditions of this
Agreement, and events which have lead to the parties entering into this
Agreement, shall remain confidential. The parties will make every effort to
avoid disclosure, directly or indirectly, of any of the terms, conditions,
facts or allegations, to any other person or entity. It is understood that
the parties may, if necessary, disclose information concerning this Agreement
and settlement or its terms, to their attorneys and accountants and/or as
required by law. Such disclosure shall not be a violation of this Agreement.
3.3 Xxxxxx agrees that he will not voluntarily participate in, be an
expert witness in, be a party, or otherwise voluntarily involve himself in
any other litigation against PEREGRINE, its related corporations, divisions,
partners, officers, employees (past or present), agents, shareholders,
representatives, heirs, assigns, executives, administrators and successors,
or any of them. Xxxxxx further agrees that he will not voluntarily assist in
any manner whatsoever any other party or litigant, in any action, against
PEREGRINE, its related corporations, divisions, partners, officers, employees
(past or present), agents, representatives, shareholders, heirs, assigns,
executives, administrators and successors, or any of them. Xxxxxx agrees to
cooperate with and to assist PEREGRINE in the event any claims are made
against PEREGRINE where his assistance would be of value to PEREGRINE.
3.4 This Agreement has been reviewed by the parties hereto and their
respective attorneys, and the parties have had a full opportunity to
negotiate the contents hereof The parties hereto expressly waive any common
law or statutory rule of construction that ambiguity
shall be construed against the drafter of this Agreement, and acknowledge
that both parties contributed equally to the drafting of this Agreement.
3.5 The parties agree that this Agreement constitutes a compromise of,
and full accord and satisfaction of, doubtful and disputed claims and shall
not be treated as an admission of liability by anyone, at any time, for any
purpose.
3.6 All parties to this Agreement agree that they will bear their own
attorneys' fees, costs and all other expenses.
3.7 In any action at law or equity between the parties seeking
enforcement of any of the terms and provisions of this Agreement, the
prevailing party in such action shall be awarded, in addition to damages or
other relief, his or its reasonable costs and expenses, including but not
limited to, taxable costs and reasonable attorneys' fees. Such recovery shall
also include out-of-pocket expenses and attorneys' fees on appeal, if any.
The court shall determine the prevailing party pursuant to California Civil
Code Section 1717.
3.8 Should any court of competent jurisdiction determine that any term
or provision of this Agreement is unenforceable, such term or provision shall
be deemed to be deleted as though it had never been a put of this Agreement,
and the validity, legality and enforceability of the remaining terms and
provisions shall not be in my way affected or imperiled thereby.
3.9 Any and all notices and other communications that are required or
permitted to be given pursuant to this Agreement shall be in writing and
shall be deemed to have been duly given if hand-delivered or if mailed,
postage prepaid, by registered or certified return receipt mail, to the
respective parties as follows:
If to Xxxxxx:
Xxxxx X. Xxxxxx
Post Xxxxxx Xxx 0000
Xxxxxx Xxxxx Xx, XX 00000
If to PEREGRINE:
Peregrine Systems
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: President
or to such other address or the attention of such other person as any such
party may direct by written notice delivered to the other party pursuant to
the provisions of this Section and shall be effective upon receipt.
3.10 No waiver by any party hereto of any breach of this Agreement by
any other party shall operate or be construed as a waiver of any other or
subsequent breach. No waiver by any party hereto of any breach of this
Agreement by any other party hereto shall be effective unless it is in
writing and signed by the party claimed to have waived such breach.
3.11 This Agreement may be amended only by a written instrument executed
by all parties hereto.
3.12 Subject to the exception set forth in Section 2.1 above (which have
no application to this paragraph), this Agreement is intended by the parties
to release and discharge any and all claims of Xxxxxx, including any possible
claims arising under the Age Discrimination in Employment Act, 29 U.S.C.
Section 621, et seq. It is the intent of the parties that this Agreement satisfy
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the requirements of the Older Workers Benefit Protection Act, 29 U.S.C.
Section 626(f). The following general provisions, along with the other
provisions of this Agreement are agreed to for this purpose.
3.12.1 Xxxxxx acknowledges and agrees that he has read and he
understands the terms of this Agreement;
3.12.2 Xxxxxx acknowledges that he has been given a full
opportunity to consult with his lawyer with respect to the laws referenced in
this Agreement, and that Xxxxxx has obtained and considered such legal
counsel as he deems necessary, such that Xxxxxx is entering into this
Agreement freely, knowingly, and voluntarily.
3.12.3 Xxxxxx acknowledges that he has been given at least
twenty-one (21) days in which to consider whether or not to enter into this
Agreement; and
3.12.4 This Agreement shall not become effective or enforceable
until seven (7) days after Xxxxxx signs this Agreement.
3.12.5 This Agreement may be executed in counterparts by the
parties in order in expedite the execution of same.
3.13 In order to expedite the execution of this Agreement, the parties
agree that facsimile signatures are an acceptable means of expressing their
agreement to the terms and conditions of this Agreement and for all purposes
facsimile signatures shall have the same effect as original signatures. Any
party providing a facsimile signature further agrees, however, that within five
(5) days of execution of the Agreement, that party will provide their signature
on an original signature page to the other parties by overnight commercial
delivery service.
3.14 This Agreement shall be construed in accordance with the laws of the
State of California.
3.15 The agreements and releases contained in this Agreement bind and
inure to the benefit of the principals, agents, representatives, heirs,
successors and assigns of Xxxxxx and PEREGRINE.
3.16 This Agreement contains the entire agreement and understanding
concerning the subject matter herein and supersedes and replaces any prior
negotiations or agreements between the parties hereto, or any of them whether
written or oral, except as expressly provided herein. Each of the parties
acknowledges that neither party nor any agent or attorney of either party has
made any promise, representation or warranty, express or implied, not
contained in this Agreement to induce the other party to execute this
Agreement in reliance upon any such promise, representation or warranty not
contained herein.
3.17 All parties agree to cooperate fully and to execute any and all
supplementary documents and to take all additional actions that may be
necessary or appropriate to give full force to the basic terms and intent of
this Agreement and which are not inconsistent with its terms.
DATED: 12/13/95 /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
DATED: 12/13/95 PEREGRINE SYSTEMS, INC.
By: /s/ Xxxx Xxxx
Its: Chief Executive Officer
