EXHIBIT 10.8
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SEPARATION AGREEMENT
This Separation Agreement ("Agreement"), dated this 16th day of October
2001, is entered into by and between Xxxxxxx X. Xxxx ("Xxxx") and
XxxxxxxXxxxxxxx.xxx ("Company").
WHEREAS: Korn has an employment agreement with the Company with an effective
date of May 15, 2000.
WHEREAS: The Company and Korn wish to terminate that employment agreement in
order to allow the Company to reduce expenses effective October 31, 2001. The
reason for the separation is not for "cause" as defined in the employment
agreement.
WHEREAS: As part of the employment agreement Korn has he is entitled to thirty
days notice of termination and a cash settlement.
WHEREAS: Korn is entitled upon termination of his status of employment to
immediate vesting of all unvested options to purchase common stock of the
Company.
WHEREAS: Korn is entitled to other remedies under the employment contract.
WHEREAS: The parties wish to enter into an agreement to alter and modify the
remedies and compensation due to Korn on termination of the employment agreement
and to create new rights and remedies including a Consultant Agreement.
WHEREAS: The parties wish to memorialize the agreed terms and obligations on
Separation.
NOW THEREFORE, in consideration of the payments set forth below and
the mutual promises contained herein, the parties agree as follows:
1. Payment of Salary and Vacation. The Company agrees to pay to Korn
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all wages due through the last day of employment, including
accrued and unused vacation time.
2. Payment of Settlement. In addition, and in consideration for this
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Agreement, the Company agrees to pay Korn separation benefits
consisting of cash compensation of $ 103,125, payable 10% on
December 1, 2000, 40% on January 1, 2001, 35% on February 1, 2001
and 15% on May 1, 2001. The Company will also pay additional
compensation consisting of Common Stock of XxxxxxxXxxxxxxx.xxx
(NASDAQ, POSO) equaling $ 75,000 worth of stock issued on the
date this agreement is executed. The Company agrees to pay all
taxes resulting from the issuance of the securities. The issuance
of the Stock is subject to a resolution from the Board of
Directors of the Company authorizing the issuance of shares of
stock as part of this settlement.
3. Registration of Stock Securities. The Company shall prepare and
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file a registration statement covering the Stock Securities
issued to Korn as well as all other outstanding stock issued by
the Company as set forth in section 2 above, and shall use its
best efforts to cause each such registration statement to become
and remain effective prior to January 11, 2002, and in any event
the Company agrees to register such shares in the next
registration statement issued by the Company.
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4. Lock up of stock, and terms under which Stock Options may be
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exercised. Korn agrees that he shall limit his sale of any of the
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common stock issued as set forth in section 2 above so as to sell
no more than 20% of the total amount of stock granted in any one
calendar month. Korn shall have an affirmative obligation to
notify the Company within ten (10) days of having sold any stock.
Korn agrees that he shall not exercise and sell more than 10% of
the total vested options as set forth in section 7 below in any
one calendar month during the first twelve months following the
effective date of this Agreement, and no more than 20% of the
total vested options in any one calendar month during the
thirteenth through eighteenth months following the effective date
of this Agreement. This provision shall be of no further effect
after the eighteenth month following the effective date of this
Agreement or if there has been a change of control of the Company
as defined in the Consultant Agreement. In addition if the
Company terminates the Consultant Agreement referenced herein
this provision shall be of no further effect, nothing herein
however shall be construed to release Korn from thee restrictions
on the sale of stock and the exercise of options if he terminates
the Consultant Agreement.
5. Unpaid Expenses. The Company agrees to pay Korn all business
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expenses incurred by Korn during his employment for which he is
entitled.
6. Consultant Agreement. As further consideration, the Company
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agrees to enter into a consulting agreement with Korn for two
years, commencing November 1, 2001, in a form substantially
similar to the draft agreement attached hereto as Exhibit "A".
7. Vesting of Rights to Purchase Common Stock of the Company. The
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Company agrees that Korn has either previously vested, or vested
as a consequence of the termination of the employment agreement
the following options: 35,000 options at a strike price of $1.15
(which is the net of original grants at $1.15 less options
exercised) 10,000 at a strike price of $3.00 and 200,000 options
granted on June 15, 2001 at a strike price of $1.25. Korn as part
of this settlement agrees to waive and disclaim any interest
whatsoever to the following options, which are also vested: 6,125
granted on 4/17/00 at a strike price of $11.00, and 133,875
options granted on 6/15/01 with a strike price of $8.813. Korn
further disclaims and releases any rights he may have to any
additional options awarded to him by the Compensation Committee
on June 15, 2001. The Company agrees that it will treat the
vested options, which Korn has with the most favorable treatment
it gives to current employees or Directors, provided however this
shall only apply if such treatment shall have a non-material
impact on the Profit and Loss for the Company.
8. Benefits. The Company agrees to continue to provide to Korn the
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same PPO (Health) and DMO (Dental) insurance, which is provided
to current employees for a period not to exceed two years. Korn
will pay the then current standard employee contribution for said
insurance. The Company shall not be obligated to provide
insurance once Korn has accepted full time employment and is
eligible for coverage under a policy that is substantially
similar under that employer's policy.
9. Computer Equipment. Company is to transfer title to the Laptop
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Computer and associated equipment and software, which Korn is
currently using as an employee of the Company.
10. Outplacement Assistance. Company agrees to pay Outplacement
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Assistance, which Korn may request in an amount not to exceed
$2,000.00. Such fee(s) shall be paid directly to the provider(s).
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11. General Release. In consideration of the above payments by
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Company and other valuable consideration, Korn for himself and
his heirs, assigns, and personal representatives agree upon
payment of all consideration required herein to forever waive and
release any and all claims, demands, rights, causes of action, or
grievances of any kind or character which he may have accrued
pursuant to common law, federal law, state laws including without
limitation any and all anti-discrimination statutes, laws and
ordinances, and local laws and regulations. Korn realizes there
are many laws and regulations prohibiting employment
discrimination pursuant to which he may have rights or claims.
These include Title VII of the Civil Rights Act of 1964, as
amended; the Age Discrimination in Employment Act of 1967, as
amended; The Americans with Disabilities Act, as amended; the
National Labor Relations Act, as amended; 42 U.S. C. 1981; and
the state human rights laws. Korn also understands that there are
other statutes and laws of contract and tort otherwise related to
his employment. Korn intends to waive and release any rights he
may have under these other laws. Said release shall run to and be
in favor of, and shall forever protect Company, and its parent
and subsidiaries, as well as all officers, directors, and agents
of Company and its parent and subsidiaries. Said release shall be
a general full and complete waiver and shall be applicable to any
and all such claims, demands, rights, wages, benefits,
employment, causes of action, or grievances, whether claims for
psychic injuries or any other injuries, which may be brought
before an administrative agency, a court, a tribunal, an
arbitrator, or otherwise, whether in law or equity, contract, or
tort, and which are related, directly or indirectly, to Korn's
employment or the termination of employment with Company. In
turn, Company hereby releases Korn, as well as his heirs,
assigns, and personal representatives, from any and all claims,
which are related, directly or indirectly, to Korn's employment.
A copy of the Mutual General Release is attached hereto as
Exhibit "B". The Release shall not be deemed to be effective
against Korn if the Company fails to make the payments due
hereunder.
12. Disparagement. Each party agrees not to defame or in any way
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disparage the other. Korn agrees not to engage in any activities
which may be detrimental, directly or indirectly, to the
interests of Company, whether such interests be property,
reputation, or otherwise.
13. Confidential Information. Korn acknowledges that during the term
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of his employment with Company, Company disclosed confidential
information to Korn, which Company deems to be valuable and
proprietary. "Confidential information" as used herein shall mean
any information of or about Company (or Company's clients or
customers, or the customers' or any vendors), which has been
disclosed to Korn or made available to him, which is not publicly
available and which is maintained by Company in confidence.
Confidential Information shall include information of or about
Company in both oral and written form, which is maintained by
Company in confidence including, but not limited to, information
about Company's finances, personnel, products, clients, or
strategic plans. Korn agrees not to make public or disclose any
Confidential Information, except as expressly permitted in
writing by Company. Korn agrees that in the event of any
violation or threatened violation of this Agreement, monetary
damages would provide an inadequate remedy so that Korn agrees,
in addition to all other rights provided by law, that Company
shall have the right to seek an injunction or equivalent remedy
issued against the Korn to prevent violations or further
violations of this provision. This provision shall not be binding
on Korn in the event the Company publicly discloses, or this
information becomes public other than by disclosure by Korn.
14. Non-Competition Covenant Not to Compete. In consideration for the
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payments to be made under this Agreement, and for the
consideration contained in the Consultant Agreement, Korn shall,
for the lesser
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of (a) two years from the effective date of this Agreement, or
(b) for 60 days after the termination of the Consultant
Agreement, either alone or in conjunction with any other person,
refrain from directly or indirectly through its present or future
affiliates:
(i) Employing, engaging or seeking to employ
or engage any person who within the prior twenty-four (24)
months had been an officer or employee of the Company, unless
said employee was involuntarily separated from the Company.
(ii) Causing or attempting to cause (A) any
client, customer or supplier of the Company to terminate or
materially reduce its business with the Company, or (B) any
officer, employee or consultant of the Company to resign or
sever a relationship with the Company;
(iii) Disclosing (unless compelled by
judicial or administrative process) or using any confidential
or secret information relating to the Company or any of their
respective clients, customers or suppliers;
(iv) Participating or engaging in (other
than through the ownership of five percent (5%) or less of any
class of securities registered under the Securities Exchange
Act of 1934, as amended), or otherwise lending assistance
(financial or otherwise) to any person participating or
engaged in, any of the lines of business in which the Company
is participating or engaged on the date of termination in any
jurisdiction in which the Company participates or engages in
such line of business on the date of termination.
The parties hereto recognize that the laws and public policies of
the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set
forth in this Section. It is the intention of the parties that
the provisions of this Section be enforced to the fullest extent
permissible under the laws and policies of each jurisdiction in
which enforcement may be sought, and that the unenforceability
(or the modification to conform to such laws or policies) of any
provisions of this Section shall not render unenforceable, or
impair, the remainder of the provisions of this Section.
Accordingly, if any provision of this Section shall be determined
to be invalid or unenforceable, such invalidity or
unenforceability shall be deemed to apply only with respect to
the operation of such provision in the particular jurisdiction in
which such determination is made and not with respect to any
other provision or jurisdiction.
The parties hereto acknowledge and agree that any remedy at law
for any breach of the provisions of this Section would be
inadequate, and Employee hereby consents to the granting by any
court of an injunction or other equitable relief, without the
necessity of actual monetary loss being proved, in order that the
breach or threatened breach of such provisions may be effectively
restrained.
The Company and the Employee acknowledge that the foregoing
restrictive covenants in this Section 14 are essential elements
of this Agreement and that, but for the agreement of the Employee
to comply with those covenants, the Company would not have agreed
to enter into this Agreement. The covenants by the Employee shall
be construed as agreements independent of any other provision in
this Agreement.
15. Confidentiality. Korn represents and agrees that he will keep the
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terms, amount and facts of this Agreement completely
confidential, and that he will not hereinafter disclose any
information relating to this Separation Agreement to anyone,
including but not limited to, any past, present or prospective
employee of the Company, the media, or anyone else, unless such
information has previously been made public by the Company.
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16. Agreement to Provide Litigation Assistance. Korn agrees that he
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shall on reasonable notice provide information and assistance
necessary regarding any litigation the Company may be or is
potentially involved with; this obligation shall survive both the
term of this agreement and the Consultant Agreement.
17. Miscellaneous.
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x. Xxxx is advised to consult with an attorney prior to
executing this Agreement, and Korn acknowledges that he has
had an opportunity to do so.
x. Xxxx may revoke this Agreement at any time within seven (7)
days following his execution of this Agreement. This
Agreement shall not become effective or enforceable until
that revocation period has expired; In order to cancel or
revoke this Agreement, Korn must deliver to the Director of
Human Resources at XxxxxxxXxxxxxxx.xxx a signed letter or
other written notice stating that he/she is canceling or
revoking this Agreement.
c. This Agreement constitutes the sole agreement between the
parties and supersedes any and all understandings and
agreements made prior hereto. There are no other
understandings, representations or agreements between the
parties other than those as contained or referenced herein.
d. It is understood and agreed that the execution of this
Agreement is not to be construed as an admission of any
liability on the part of Company; the Company specifically
disclaims any wrongdoing of any part or any nature with
respect to Korn.
e. This Agreement and each of its provisions are binding upon,
and inure to the benefit of the parties as well as their
respective heirs, executors, administrators, successors
and/or assigns.
f. All agreements and covenants contained herein are severable.
In the event that any of them are held to be invalid by any
competent court, this Agreement shall be interpreted as if
such invalid agreement or covenants were not contained
herein.
g. In the event that any action is filed in relation to this
Agreement or to the employment relationship between the
parties, the prevailing party is entitled to recover all
costs and expenses, including reasonable attorneys' fees and
expert witness fees, from the other party.
h. This Agreement shall be construed under and governed by the
state law in which Korn resides, Texas.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
Xxxxxxx X. Xxxx
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Date:
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"Company"
XxxxxxxXxxxxxxx.xxx
By:
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Printed or Typed Name:
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Date:
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