EXHIBIT 10.2
SEPARATION AGREEMENT
This Separation Agreement (this "Agreement") is entered into as of November
6, 1998 (the "Effective Date") by XXXXXX X. XXXXXX (hereinafter referred to as
"Sperry") and PRIMUS KNOWLEDGE SOLUTIONS, INC. (hereinafter referred to as the
"Company").
RECITALS
X. Xxxxxx has served as Chairman of the Board ("Chairman") and as a
director, officer and employeeof the Company.
X. Xxxxxx and the Company wish to enter into an agreement setting forth
the terms under which his employment and other services for the Company will
terminate.
C. This Agreement is not and should not be construed as an admission or
statement by either party that it or any other party has acted wrongfully or
unlawfully. Both parties expressly deny any wrongful or unlawful action.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises contained below, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, it is agreed as follows:
1. TERMINATION DATE AND RESPONSIBILITIES
Sperry's service as Chairman and a director and employee of the Company
will terminate effective at 12:01 a.m. on the Effective Date, and Sperry shall
submit to the Company simultaneous with the execution and delivery of this
Agreement a written resignation of his positions as an officer and director and
employee of the Company. From and after the Effective Date, Sperry shall no
longer be an officer or director or employee of the Company, and shall have no
further duties as such; provided, however, that with respect to minutes of board
meetings which Sperry attended while a director and which have not yet been
reviewed and approved by the board of directors in ordinary course, Sperry shall
have the opportunity to review and make comments upon such minutes. As of the
Effective Date, Sperry's employment with the Company will terminate and he will
have no further employment responsibilities to the Company. Company will, in the
ordinary course of its payroll cycles, compute and pay to Sperry amounts due in
consideration of accrued but unused vacation time.
2. CIRCUMSTANCES OF TERMINATION
Sperry and the Company agree that Sperry will resign from the Company and
that for all future purposes they will acknowledge Sperry's termination of
employment and board service as a voluntary resignation. The Company shall,
after consultation with Sperry, disseminate an announcement concerning Sperry's
voluntary resignation to (a) the Company's employees, (b) the Company's
customers and (c) the Company's shareholders.
3. SEVERANCE PAYMENT
The Company shall pay Sperry Seventy Five Thousand Dollars ($75,000)
severance pay, less withholding of such taxes and amounts which are required by
law.
4. COBRA Benefits
The Company and Sperry acknowledge Sperry's right to self-pay medical
benefits under COBRA if he elects to do so.
5. STOCK OPTIONS
5.1 Status of Stock Options
Sperry and the Company acknowledge and agree that the stock options held by
Sperry, and the status thereof, are as set forth in this Section 5:
(a) Options to purchase 495,000 shares of common stock at an exercise price
of $.29425 per share granted to Sperry on November 26, 1993, as listed in
Exhibit A, shall expire on November 26, 1998 in accordance with their terms and
the terms of the stock option plan under which such options were granted, unless
Sperry exercises such options before expiration.
(b) Options to purchase 399,999 shares of common stock at an exercise price
of $.75 per share granted to Sperry on June 12, 1995, as listed in Exhibit A,
are fully vested and exercisable as of the date hereof, and options to purchase
200,000 shares of common stock at an exercise price of $1.00 per share granted
to Sperry on August 15, 1995, as listed in Exhibit A, are partially vested (50%)
as of the date hereof and shall become fully vested and exercisable on January
1, 1999 in accordance with their terms and the terms of the stock option plan
under which such options were granted. The 90-day post-termination exercise
period specified in such plan shall commence on the Effective Date in accordance
with the plan with respect to all options listed in this paragraph.
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(c) The options to purchase 350,000 shares of common stock at an exercise
price of $1.00 per share granted to Sperry on December 19, 1997, as listed in
Exhibit B, shall terminate on the Effective Date in accordance with their terms
and the terms of the stock option plan under which such options were granted.
(d) Options to purchase 1,977,843 shares of common stock at an exercise
price of $1.00 per share granted to Sperry on December 19, 1997, as listed in
Exhibit B, shall expire on the fifth anniversary of the Effective Date in
accordance with their terms and the terms of the stock option plan under which
such options were granted, unless Sperry exercises such options before
expiration.
(e) This Agreement confirms the termination pursuant to resolutions of the
of Board of Directors of the Company dated December 19, 1997 (the " 12/97
Resolutions") of 1,977,843 options previously awarded to Sperry, and the award
under the 12/97 Resolutions of (i) a non-qualified stock option to Sperry to
acquire 1,977,843 shares of the Company's Common Stock, at an exercise price of
$1.00 per share, and (ii) a non-qualified stock option to Sperry to acquire
350,000 shares of the Company's Common Stock, at an exercise price of $1.00 per
share, all as more particularly described in the 12/97 Resolutions. This
Agreement shall serve as the Option Termination Agreement referred to in the
12/97 Resolutions.
5.2 Acknowledgment Regarding Stock Options
Sperry hereby acknowledges that, other than this Agreement, there are no
agreements or commitments between him and the Company, other than the provisions
contained in the applicable stock options plans under which his options were
granted and in any stock option agreements delivered to Sperry in connection
therewith, concerning the vesting or other terms of his options. The Company
hereby acknowledges that Sperry has stated that he presently intends to exercise
all vested but unexercised options held by him, within the option exercise
periods referenced above. The Company covenants that it will comply with its
obligations under the applicable Stock Option Agreements and Stock Option Plans.
Nothing in this Agreement shall obligate the Company or any plan administrator
under such plans to exercise any discretion granted to it under such plans to
the detriment of the Company (for example, but without limitation, (a) the
Company shall be under no obligation to accept any non-cash consideration for
the exercise of stock options, if the acceptance of such consideration would
cause the Company to incur any financial charge, and (b) the Company shall be
under no obligation to exercise any discretion if, in consequence, in the
opinion of the Company's accountants, such exercise would render unavailable to
the Company any "pooling of interest" accounting).
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6. NONDISPARAGEMENT
6.1 Nondisparagement by the Company
The Company hereby agrees that it will not make, and it will use reasonable
efforts to prevent its present and future affiliates, directors and employees
from making, any false, misleading, disparaging, or negative representations or
statements with regard to Sperry or his abilities, business practices,
judgments, decisions or employment by the Company; provided, however, that the
Company may (a) inform others of the dates of Sperry's employment by the
Company, his rate of pay and the existence and terms of the Information
Agreement (as defined below), (b) take any action it deems necessary or
appropriate to enforce its rights under this Agreement and the Information
Agreement and (c) make any disclosures required by law.
6.2 Nondisparagement by Sperry
Sperry hereby agrees that he will not make, and he will use reasonable
efforts to prevent his present and future affiliates, employers, employees and
family members from making, any false, misleading, disparaging or negative
representations or statements with regard to the Company or its business,
business practices, products, services, policies, judgments, decisions,
officers, directors or employees; provided, however, that Sperry may (a) inform
others of the dates of Sperry's employment by the Company, his rate of pay and
the existence and terms of the Information Agreement (as defined below), (b)
take any action he deems necessary or appropriate to enforce his rights or
defend his actions under this Agreement and the Information Agreement and (c)
make any disclosures required by law.
7. CONFIDENTIALITY OF AGREEMENT
Sperry and Company agree that, except to the extent required by applicable
law and financial disclosures in accordance with GAAP, each of them will keep
the terms of this Agreement completely confidential, and that neither of them
will disclose any information concerning this Agreement or its terms to anyone
other than their respective legal counsel, and/or financial advisors, and in the
case of Sperry, Sperry's immediate family, all of whom will be informed of and
bound by this confidentiality clause; provided, however, that Sperry shall in
appropriate circumstances disclose the limitations that the Information
Agreement place on him.
8. ENTIRE AGREEMENT; AMENDMENT
This Agreement sets forth the entire understanding between Sperry and the
Company and supersedes any prior agreements or understanding, express or
implied,
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pertaining to the terms of his employment with the Company and the termination
of the employment relationship. Sperry acknowledges that in executing this
Agreement, he does not rely upon any representation or statement by any
representative of the Company concerning the subject matter of this Agreement,
except as expressly set forth in the text of the Agreement. This Agreement may
not be modified or amended except by a written instrument executed by both
parties.
9. SUCCESSORS AND ASSIGNS
This Agreement is binding on the heirs, successors, representatives and
assigns of each party.
10. SEVERABILITY; HEADINGS
If any provision of this Agreement is held to be invalid, then such
invalidity shall not render invalid the remainder of this Agreement or the
remainder of which such invalid provision is a part. If any provision is so
broad as to be held unenforceable, then such provision shall be interpreted to
be only so broad as is enforceable. The captions and headings are inserted in
this Agreement for convenience only, and shall not be deemed to limit or
describe the scope or intent of any provision of this Agreement.
11. COUNTERPARTS
This Agreement may be executed on separate counterparts, any one of which
need not contain signatures of more than one party, but all of which taken
together shall constitute one and the same agreement.
12. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the state of Washington without application of the principles of
conflicts of laws.
[This space intentionaly left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates indicated below.
PRIMUS KNOWLEDGE SOLUTIONS, INC.
/s/ XXXXXXXXX X. XXXXXXX /s/ XXXXXX X. XXXXXX
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Title: VP-CFO XXXXXX X. XXXXXX
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Dated: 11/6/98 Dated: 11/6/98
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EXHIBIT A
INCENTIVE STOCK OPTIONS
GRANT DATE TYPE GRANTED PRICE EXERCISED VESTED CANCELED UNVESTED EXPIRATION DATE
11/26/93 ISO 495,000 $0.29425 0 495,000 0 0 11/26/98
6/12/95 ISO 399,999 $ 0.75 0 399,999 0 0 6/12/05
8/15/95 ISO 200,000 $ 1.00 0 100,000 0 100,000 8/15/05
EXHIBIT B
NON-QUALIFIED STOCK OPTIONS
GRANT DATE TYPE GRANTED PRICE EXERCISED VESTED CANCELED UNVESTED EXPIRATION DATE
12/19/97 NQSO 1,977,843 $1.00 0 1,977,843 0 0 12/19/2007
12/19/97 NQSO 350,000 $1.00 0 0 0 350,000 12/19/2007
November 7, 1998
HAND DELIVERED
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The Board of Directors
Primus Knowledge Solutions, Inc.
c/o Xx. Xxxx Xxxxxx, Director
Suite 1900, 0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Re: Resignation from Primus
Dear Fellow Board Members:
I hereby resign from my positions as Chairman of the Board of Directors of
Primus Knowledge Solutions, Inc. ("Primus"), as a Primus director, as an officer
of Primus, and from my employment with Primus. My resignation is tendered
concurrent with my execution and delivery of a Separation Agreement between
myself and Primus, and is contingent upon Primus' execution of such Separation
Agreement.
Let me also take this occasion to reassure you that I have been deliberate
and methodical in reviewing my entire relationship with Primus, including my
obligations to Primus under the employee confidentiality agreement which I
signed. Moreover, I am hereby returning to Primus all "Materials" (within the
meaning of the confidentiality agreement), along with a written inventory of
these returned materials. You can rest assured that I have absolutely no
intention of ever misusing these materials, nor have I ever done so.
As the founder of Primus and as an owner of the company, I thank each of
you for your efforts, and wish Primus every success.
Sincerely,
Xxxxxx X. Xxxxxx
