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Exhibit 10.6
XXXXXXX AGREEMENT
This Agreement is made and entered into effective as of March 30, 1998
(the "Effective Date"), by and between TIMELINE, INC., a Washington corporation
("Company"), and XXXX X. XXXXXXX ("Xxxxxxx").
RECITALS
WHEREAS, Xxxxxxx has been President and Chief Executive Officer of the
Company pursuant to an Employment Agreement dated September ___, 1994 and
amended February 1995 and October 1995 (the "1994 Employment Agreement"), until
the Company requested his resignation from that position in November, 1996,
whereafter he has continued at the request of the Company to be employed as
___________; and
WHEREAS, the 1994 Employment Agreement is to expire on September ___,
1999; and
WHEREAS, Xxxxxxx has accrued certain unpaid salary and the right to a
sabbatical, unpaid vacation and accrued sick leave, which issues the Company and
Xxxxxxx wish to address; and
WHEREAS, the 1994 Employment Agreement referenced a Technology Transfer
Agreement dated April 19, 1993 (the "Technology Agreement") and a Noncompetition
Agreement dated April 19, 1993 (the "Noncompetition Agreement"); and
WHEREAS, the Company and Xxxxxxx wish to terminate Xxxxxxx'x employment
with the Company and to arrange for the retention of Xxxxxxx as a consultant to
the Company;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows.
1. Termination of Employment. The Company and Xxxxxxx mutually agree
that Xxxxxxx'x employment by the Company shall terminate effective April 1, 1998
(the "Termination Date"), subject to the obligation of the Company to pay the
following amounts and provide the following time off which are related to
services previously provided to the Company by Xxxxxxx prior to the Termination
Date.
(a) Deferred Salary. The Company and Xxxxxxx agree and
acknowledge that, as of March 31, 1998, Xxxxxxx is owed deferred salary
and accrued vacation pay, in the aggregate amount of $70,274.78 (the
"Deferred Salary and Accrued Benefits"). The Company shall make payments
on such
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Deferred Salary and Accrued Benefits at a rate of no less than $4,337.00
per month until fully paid. In the event that Timeline either (i) sells
substantially all of its assets to a third party, or (ii) is merged with
or substantially all of its shares are acquired by a third party, the
Deferred Salary and Accrued Benefit remaining unpaid shall be
immediately paid to Xxxxxxx. In the event Xxxxxxx elects in writing,
Xxxxxxx may receive $2.00 of advance license credit for each $1.00 of
Deferred Salary. Xxxxxxx expressly acknowledges that the Deferred Salary
and Accrued Benefit amount includes all accrued but unused vacation and
sick leave owed to Xxxxxxx throughout his employment through the
Termination Date. There are no other amounts owing to Xxxxxxx, except as
expressly provided in 1(b), 1(c) and 1(d) below or except for
legitimate, unreimbursed expenses incurred by Xxxxxxx pursuant to the
Company's policies, through the Termination Date.
(b) Sabbatical. The Company shall pay Xxxxxxx for his unused
sabbatical in the amount of $25,000.00 at the rate of $8,667.00 per
month beginning April 1, 1998.
(c) Acceleration of Payment. If the Company signs a contract
with Seagate Software, which contract requires disclosure to the Company
shareholders, then the Company shall immediately pay Xxxxxxx any amount
of (i) unpaid Deferred Salary and Accrued Benefit and (2) unpaid
sabbatical.
(d) COBRA Benefits. The Company will pay Xxxxxxx'x COBRA medical
insurance continuation premiums for a period of one (1) month, beginning
as of April 1, 1998 (the "COBRA Premiums"). Xxxxxxx acknowledges and
agrees that other than as provided in this Agreement, the Company has no
obligation to pay COBRA Premiums.
2. Professional Services. Xxxxxxx shall use his best efforts to close
matters dealing with Managed Care located in Phoenix and Habitat for Humanity,
prior to the Termination Date. Commencing April 1, 1998, Xxxxxxx shall consult
with the Company on subjects concerning marketing, software programming and
installation of Company products ("Consulting") at such times as the Company may
reasonably request upon the following terms and conditions:
(a) Rate. Xxxxxxx shall be paid weekly at the rate of $100.00
per hour for each hour of Consulting. When traveling, all travel time is
billable and trips to the East Coast shall require one day of travel (8
hours).
(b) Minimum. The Company shall be obligated to offer
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to Xxxxxxx no fewer than 600 hours of Consulting in 1998.
(c) Offset. At the sole election of Xxxxxxx, any amount due
Xxxxxxx for Consulting, whether or not applicable to the minimum payment
requirement set forth in subsection (b), may be offset against any
software license fee due under the terms of the Distributor Agreement.
(d) Scheduling. The Company shall take into consideration and
accommodate Xxxxxxx'x three (3) month sabbatical when scheduling its
request for Consulting. All Consulting shall be utilized based upon a
full day of no less than eight (8) hours.
(e) Working Facilities. While Consulting, Xxxxxxx shall be
furnished with such office, facilities, services, supplies, and
assistants as are suitable and adequate for the proper performance of
his duties.
(f) Expenses. Xxxxxxx shall be reimbursed by the Company for his
reasonable expenses, incurred in connection with Consulting, in
accordance with the general policy of Company regarding reimbursement of
expenses as adopted by the Board of Directors of Company from time to
time. Xxxxxxx shall receive reasonable advances for expenses he is
expected to incur.
3. Distributor Agreement. On April 1, 1998, Xxxxxxx shall become a
distributor of Company products pursuant to the Distributor Agreement and
Software License (the "Distributor Agreement") attached hereto as Exhibit A.
4. Equipment. The Equipment listed on Exhibit B attached hereto is all
of the equipment owned by the Company now in the possession of Xxxxxxx (the
"Equipment"). Xxxxxxx shall have the continued use of the Equipment until such
time as the Company shall offer the Equipment to Xxxxxxx to purchase at the
lower of (i) the Company's book value of the Equipment, (ii) the Company's tax
basis in the Equipment, or (iii) the fair market value of the Equipment in a
distressed sale.
5. Microsoft Software. Until such time that Timeline shall have one
hundred computers, and to the extent permitted by third-parties, Xxxxxxx shall
be entitled to participate in Timeline's Microsoft Solution Provider Software
Program and shall be provided copies of Microsoft's software provided to
Timeline for use on the computers listed on Exhibit B or any computers purchased
by Xxxxxxx.
6. Right to Indemnification. In order to assure the Company's ability to
provide Xxxxxxx the indemnification to which
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he may be entitled by virtue of his services as a director and executive officer
of the Company, pursuant to the indemnification policies which are available to
any officer or director and are contained in the Company's Articles of
Incorporation, Bylaws, and other applicable laws and Company policies, the
Company shall continue in effect its existing Directors and Officers ("D&O")
Insurance policy which shall provide coverage for all current and past officers
and directors. The Company shall provide proof annually to Xxxxxxx of the
existence of such a D&O policy which is in full force and effect, for a period
of ten (10) years after the Termination Date.
7. Support of Timeline. Pursuant to the guidelines set forth therein,
Xxxxxxx shall use his best efforts under the Distribution Agreement, and,
consistent with those efforts, shall at all times publicly support the Company's
business. Xxxxxxx and the Company, and its officers and directors, agree not to
make any disparaging statements, either written or verbal, to any third party
regarding the Company, its products, its directors or officers, or Xxxxxxx.
8. Termination. Xxxxxxx and the Company agree that this Agreement shall
not be construed or interpreted as either an express or implied admission that
Xxxxxxx'x cessation of employment was in any way improper or that Xxxxxxx'x
conduct as an employee and director of the Company was in any way improper or
otherwise breached his employment or other agreements with the Company.
9. Joint Press Release. The Company and Xxxxxxx will issue a joint press
release indicating Xxxxxxx'x resignation as an employee and director of the
Company and the assumption of a distributorship role which shall be published to
customers, the industry and shareholders.
10. Waiver of Claims.
(a) By Xxxxxxx. Except for future claims against the Company for
(i) obligations arising from this Agreement and Distributorship
Agreement and Source Code License, and (ii) indemnification and for the
advancement of costs that Xxxxxxx may have under any applicable
statutes, articles of incorporation, bylaws and/or agreements providing
for the indemnification of Xxxxxxx by virtue of the fact that he was an
officer and director of the Company, Xxxxxxx agrees that payment of the
amount due under the terms of this Agreement and the other covenants of
the Company to be performed by it hereunder constitute full and complete
settlement for any and all other claims of Xxxxxxx against the Company,
whether known or unknown, based in any way on Xxxxxxx'x employment with
or cessation of employment from the Company or
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Xxxxxxx'x activities while an officer or director of the Company,
including but not limited to claims relating to his age, sex, religion,
national origin, ADA, mental, sensory or physical status, which may be
pursued or prosecuted in any state, federal, local, administrative or
other forum. Except with respect to indemnification claims referred to
above, Xxxxxxx waives and relinquishes all claims to any other remedy
against the Company. This paragraph shall become effective only upon the
payment in full of the amounts to Xxxxxxx as set forth in Section 1
above.
(b) By the Company. The Company hereby releases any and all
claims the Company may have against Xxxxxxx for the repayment of any
expenses, advances or reimbursements. The Company acknowledges that it
knows of no pending or threatened litigation against the Company or its
officers or directors which could involve a claim against Xxxxxxx and
which has not been disclosed to Xxxxxxx in writing.
11. Supersedes Prior Employment Agreements. This Agreement supersedes
that certain Xxxxxxx Employment Agreement dated as of April 19, 1993, by and
between Company and Xxxxxxx (the "1993 Employment Agreement"), and the 1994
Employment Agreement.
12. Notices. Any notice or other communication required hereunder shall
be in writing, mailed in the United States, First Class, postage prepaid and
shall be presumed to have been delivered five (5) days after the date of mailing
as follows:
If to Xxxxxxx: Xxxx X. Xxxxxxx
P. O. Box 881056
Steilacoom, WA 98388-0616
If to the Company: Timeline, Inc.
0000 000xx Xxx. X.X.
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
or to such other address as Xxxxxxx or the Company may direct in writing.
13. Applicable Law and Venue. This Agreement shall be interpreted under
the laws of the State of Washington. Venue for any suit brought to enforce any
rights or remedies granted herein shall lie in the Superior Courts of the State
of Washington or the federal courts of the Western District of Washington.
14. Legal Fees. If Timeline or Xxxxxxx employs attorneys to enforce any
rights arising from this Agreement, the substantially prevailing party shall be
entitled to recover
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reasonable attorney's fees and costs, including any costs of appeal. Legal fees
and costs incurred by Xxxxxxx in the preparation and negotiation of this
Agreement and the Distribution Agreement shall be paid by Timeline.
15. Miscellaneous.
(a) All rights of the Xxxxxxx to indemnification shall survive
any termination of this Agreement.
(b) This Agreement contains the entire agreement between the
parties relating to Xxxxxxx'x employment by Timeline and his retention
as a consultant, and no modification of this Agreement shall be valid
unless made in writing and signed by the parties hereto.
(c) No assignment of any benefits due or to become due hereunder
shall be made by Xxxxxxx without the prior written consent of Company.
In the event of Xxxxxxx'x death, any benefits due or to become due under
this Agreement which would otherwise be payable to Xxxxxxx up to the end
of the month in which his death occurs, and any balance remaining on
Deferred Salary and Accrued Benefits shall become a part of Xxxxxxx'x
estate and shall be distributed to his personal representative.
16. Survival. The obligations of the parties set forth in Sections 6, 7
and 10 are continuing and shall survive any implied term of this Agreement and
any payment obligations set forth herein.
17. Authority. The Company represents that the officer signing this
Agreement has the full power, authority and capacity to enter into and bind the
Company to this Agreement.
EXECUTED as of the day and year first above written.
COMPANY:
TIMELINE, INC. XXXXXXX:
By: /s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxx X. Xxxxxxx
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Its: President/CEO Xxxx X. Xxxxxxx
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