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TERMINATION AND BUY-OUT AGREEMENT
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THIS TERMINATION AND BUY-OUT AGREEMENT ("Agreement") is entered into
effective as of the 1st day of June, 1998, by and between XXXXXXXX.XXX, INC., a
California corporation (formerly known as the Shopper's Source, Inc.) (the
"Company") and XXXXXX X. XX XXXXX (an "Individual").
WHEREAS, the parties entered into the Employment Agreement effective as
of May 1, 1997, a copy of which is attached hereto as Exhibit "A", and
incorporated herein by this reference ("Original Agreement"), under which
Executive was employed as the Chief Executive Officer and President of the
Company;
WHEREAS, the Company and Executive now desire to terminate the Original
Agreement under the terms and conditions as hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. Termination. The parties hereby agree that the Original Agreement is
terminated effective as of June 1, 1998 ("Effective Date").
2. Payment of Wages. Executive represents and agrees that he has
received all sums owed to him by the Company, including but not limited to
wages, earned but unused vacation pay, and any other payments and/or benefits to
which he is entitled under the Original Agreement through the Effective Date,
and otherwise under Company policy, and/or California law.
3. Cash Consideration. In consideration for agreeing to terminate the
original agreement under the terms hereof, Executive shall receive a total of
Five Hundred Thousand Dollars ($500,000) in cash ("Cash Consideration"), payable
under the following schedule: $100,000 on or before July 31, 1998; and $50,000
on or before the last day of each succeeding fiscal quarter of the Company,
beginning October 31, 1998, until the Cash Consideration is fully paid.
Notwithstanding the foregoing, in the event the number of members of the Board
of Directors of the Company equal to a majority of the Board as of the Effective
Date hereof are replaced by other members, Executive shall have the option of
accelerating any remaining payments of Cash Consideration due under this Section
3, to be paid in a lump sum, upon thirty (30) days written notice to the
Company.
On the Effective Date, Executive shall cease to be an employee of
Company for all purposes, including but not limited to California employment and
labor laws, and California and Federal tax purposes. All Cash Consideration paid
under this Agreement is agreed to be paid under the terms of this Contract, and
is not paid to Executive as an employee of the Company. Therefore, Company shall
not be obligated to, and shall not, withhold any amounts from the Cash
Consideration for payment of employment or withholding taxes, and Executive is
solely responsible for all taxes which may be due as a result of payment of the
Cash Consideration.
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4. Stock Options. As additional consideration under this Agreement,
Executive shall be granted the option to purchase One Hundred Fifty Thousand
(150,000) shares of the common stock of the Company, commencing on the effective
date of this Agreement, and ending five (5) years thereafter, for a purchase
price of $16 per share, and otherwise pursuant to the terms of the Stock Option
Agreement, a copy of which is attached hereto as Exhibit "B", and incorporated
herein by this reference.
5. Continuing Indemnification of Executive by Company. It is further
understood and agreed to between the parties that Executive shall continue to be
indemnified for his actions or omissions during the period he was a duly-elected
director and officer of the Company, to the fullest extent permitted under
California law and as more specifically set forth in Article V of the Company's
Articles of Incorporation; and in particular, the Company shall indemnify
XxXxxxx as a duly-elected director and officer of the Company with respect to
any and all pending lawsuits against him involving his acts or omissions in such
capacity or capacities and against any such future lawsuits that may be filed.
6. Release of Company by Executive. Executive hereby releases and
forever discharges Company, its successors, representatives, assigns, agents,
transferees, managers, members, principals, employees, servants, and attorneys,
and each of them, of and from any and all claims, debts, liabilities, demands,
obligations, costs, expenses, damages, actions and causes of action of
whatsoever kind or nature, whether known or unknown, anticipated or
unanticipated, based on, arising out of or in connection with anything
whatsoever done, omitted or suffered to be done at any time prior to the date of
this Agreement, including but not limited to any and all claims, debts,
liabilities, demands, obligations, costs, expenses, damages, actions and causes
of action of whatsoever kind or nature, whether known or unknown, anticipated or
unanticipated, based on, arising out of or in connection with any of the
payments due, or matters or facts alleged or set forth in the Original
Agreement, the Recitals above, or in any way relating to Executive's employment
with the Company.
7. Release of Executive by Company. Company hereby releases and forever
discharges Executive, its heirs, successors, representatives, assigns, agents,
transferees, principals, shareholders, employees, servants, and attorneys, and
each of them, of and from any and all claims, debts, liabilities, demands,
obligations, costs, expenses, damages, actions and causes of action of
whatsoever kind or nature, whether known or unknown, anticipated or
unanticipated, based on arising out of or in connection with anything whatsoever
done, omitted or suffered to be done at any time prior to the date of this
Agreement, including but not limited to any and all claims, debts, liabilities,
demands, obligations, costs, expenses, damages, actions and causes of action of
whatsoever kind or nature, whether known or unknown, anticipated or
unanticipated, based on, arising out of or in connection with any of the matters
or facts alleged or set forth in the Original Agreement, the Recitals above, or
in any way relating to Executive's employment with the Company.
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8. Full and Final Release. Each party understands that Section 1542 of
the Civil Code of California reads as follows:
"1542. (Certain claims not affected by general release.) 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."
Each party hereby expressly waives Section 1542 of the California Civil Code. It
is further understood and agreed that this full and final release is intended to
cover and does cover all and any future damages described or arising out of the
facts alleged in the lawsuit referenced in the Recitals of this Agreement not
known, or which may later develop, or be discovered, including the effects or
consequences thereof and including all causes of action therefor.
9. Ownership of Claims. The parties to this Agreement warrant and
represent that they are the only persons or entities which have any interest in
any of the matters herein compromised or released, and that none of such claims,
causes of action, costs or demands, or any part thereof, have been assigned,
granted or transferred in any way to any other person.
10. Definitions. Unless otherwise defined herein, certain definitions
used in this Agreement have the same meaning set forth for such terms in the
Original Agreement.
11. Governing Law. It is understood and agreed that the construction and
interpretation of this Agreement shall at all times and in all respects be
governed by the laws of the State of California, without giving effect to
principles of conflict of laws. The parties hereto agree that the California
courts shall have jurisdiction over matters arising relating to this Agreement,
and that the venue for any such actions shall be Orange County, California.
12. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or enforceability of any one or more of the
provisions hereof shall not affect the validity and enforceability of the other
provisions hereof.
13. Entire Agreement. This Agreement contains the entire agreement and
understanding by and among the parties hereto with respect to the subject matter
hereof, and no representations, promises, agreements, or understandings, written
or oral, not herein contained shall be of any force or effect.
14. Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege
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hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.
15. Captions. The captions appearing in this Agreement are inserted only
as a matter of convenience and as a reference and in no way define, limit or
describe the scope or intent of this Agreement or any of the provisions hereof.
16. Further Instruments and Actions. The parties agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.
17. Notices. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, or by United States mail, certified or registered, return receipt
requested, or otherwise actually delivered to the addresses set forth on the
signature page hereof or at such address as may have been furnished by such
person in writing to the other parties. Any such notice, demand or other
communication shall be deemed to have been given on the date delivered or as of
the date mailed, as the case may be.
18. Attorneys' Fees. If legal action is instituted by any party to
enforce the terms of this Agreement, the prevailing party in such action or
proceedings shall be entitled to reasonable attorneys' fees and costs of such
action in addition to any other award, including any such costs of appeal.
19. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
20. Representation by Counsel. Each party hereby agrees and acknowledges
that (i) he and it has had the opportunity to consult with independent legal,
tax and financial counsel of each party's choice, in order to be advised with
respect to the effect of this Agreement.
21. Construction. Any issues with respect to construction or
interpretation of this Agreement are to be resolved without resort to the
presumption that any ambiguities in this Agreement should be construed against
the drafter.
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IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, effective as of the day and first above written.
ADDRESSES: COMPANY:
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00000 X. Xxxxx Xxxxxxx XXXXXXXX.XXX
Garden Level a California Corporation
Xxxxxx Xxx Xxx, XX 00000
Dated: 6-1-98 By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Chairman of the Board
and Compensation Committee Member
Dated: 6-1-98 By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, Compensation
Committee Member and Director
Dated: 6-1-98 By: /s/ Xxxxxxxx X. Xxxxxxx
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Xxxxxxxx X. Xxxxxxx, Secretary
0000 Xxxxxxxx Xxxxx XXXXXXXXX:
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 ---------
Dated: 5-29-98 /s/ Xxxxxx X. XxXxxxx
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Xxxxxx X. XxXxxxx, an individual
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