EXHIBIT 10.19
June 30, 2003
By Hand Delivery
----------------
Xxxxxxx X. Xxxxx
000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Re: Separation Agreement and General Release of Claims
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Dear Xxxxx:
This letter is to confirm your voluntary resignation from your position
as Chief Financial Officer of Neoware Systems, Inc. (the "Company") effective
April 28, 2003, your agreement to remain as a non-executive officer employee of
the Company until October 31, 2003, which may be extended to December 31, 2003
upon the mutual agreement of you and the Company in writing (the "Full-time
Termination Date") and your agreement to remain as a part-time employee of the
Company until April 30, 2004 (the "Termination Date").
In an effort to provide you with certain benefits relating to your
termination of employment, the Company proposes the following agreement
("Separation Agreement") and General Release of Claims:
1. In consideration for your general release and your fulfillment of
the various undertakings set forth in this Separation Agreement, the Company
agrees as follows:
(a) During the period from April 28, 2003 until October 31,
2003, or if mutually agreed upon in writing by you and the Company, until
December 31, 2003, the Company will employ you as a full-time non-executive
officer employee of the Company and will pay you your current base salary and
continue to provide your current benefits, at regular pay intervals and less
taxes and other deductions required by law to be withheld. For the fiscal year
ended June 30, 2003, you will be eligible for the payment of a bonus award under
the 2003 Executive Compensation Plan without pro-ration for the portion of the
fiscal year during which you did not serve as an executive officer, subject to
approval of the Stock Option and Compensation Committee.
(b) During the period from the Full-time Termination Date
until April 30, 2004 (Termination Date), the Company will employ you as a
part-time employee of the Company and will pay you $125.00 per hour at regular
pay intervals and less taxes and other deductions required by law to be
withheld.
Xxxxxxx X. Xxxxx
June 30, 2003
Page 2
(c) Notwithstanding your release under paragraph 2(c) below,
the Company acknowledges that the provisions of the Company's 1995 Stock Option
Plan ("Plan") and your option agreements thereunder (including the vesting
schedule) will continue to apply to your options in accordance with the terms of
the Plan and your option agreements until April 30, 2004, provided that you
comply with your obligations under this Agreement and remain an employee of the
Company as of such date, on which date all of your options, other than those
vested and exercisable on April 30, 2004, shall be canceled.
(d) The Company agrees to pay you an additional bonus (the
"Additional Bonus") equal to three (3) months' pay based upon your current base
salary, less taxes and other deductions required to by law to be withheld, which
amount will be paid in the first payroll period in January 2004.
(e) The Company agrees to pay you severance in an amount equal
to six (6) months' pay based on your current base salary, less taxes and other
deductions required by law to be withheld, which amount will be paid during the
first payroll period in January 2004.
2. In consideration for the Company's promises in paragraph 1, and
intending to be legally bound, you represent, warrant and agree as follows:
(a) You confirm that you voluntarily resigned as Chief
Financial Officer of the Company effective as of April 28, 2003.
(b) Subject to paragraph 3, you agree that from and after
April 28, 2003 until October 31, 2003, or such later Full-time Termination Date
mutually agreed upon by you and the Company, you will serve as a full-time
employee of the Company and will provide such services as may be reasonably
requested by the Company. You agree that in such position, you will no longer be
an executive officer of the Company.
(c) Subject to paragraph 3, from and after the Full-time
Termination Date until your Termination Date, you will serve as a part-time
employee of the Company and be available to work at least 1 day per week, with
the exact number of hours subject to the Company's discretion but shall be a
minimum of 1 day per week, and provide such services as may reasonably be
requested by the Company, including but not limited to services relating to
significant finance-related assignments reporting to the Chief Financial
Officer.
(d) You agree that you will give the Company forty-five days
(45) prior written notice of your intention to terminate your full-time
employment and your part-time employment.
Xxxxxxx X. Xxxxx
June 30, 2003
Page 3
(e) By your signature on this Separation Agreement, you hereby
fully and forever release and discharge the Company and its parents, affiliates
and subsidiaries, including all predecessors and successors, assigns, officers,
directors, trustees, employees, agents and attorneys, past and present ("the
Released Parties"), from any and all claims, demands, liens, agreements,
contracts, covenants, actions, suits, causes of action, obligations,
controversies, debts, costs, expenses, damages, judgments, orders and
liabilities, of whatever kind or nature, direct or indirect, in law, equity or
otherwise, whether known or unknown, arising out of your employment by the
Company or the termination thereof, including, but not limited to, any claims
for relief or causes of action under any Federal, state or local statute,
ordinance or regulation regarding discrimination in employment and any claims,
demands or actions based upon alleged wrongful or retaliatory discharge or
breach of contract under any state or Federal law. This release shall include a
release of all claims for attorneys' fees.
You agree that this release specifically includes a
release of any and all claims arising under the Age Discrimination in Employment
Act of 1967, as amended ("ADEA"), and any state or local discrimination laws.
You acknowledge that you are being given twenty-one (21) days in which to
consider whether you wish to sign this Separation Agreement, including this
release. Moreover, you agree that, once you sign the Separation Agreement,
including this release, you shall then have seven (7) days in which to change
your mind and revoke it (the "Revocation Period"). If you wish to revoke this
release, you must send the revocation in writing by certified mail to Xxxxx X.
Xxxxxxx, Executive Vice President and Chief Financial Officer, 000 Xxxxxxx
Xxxxx, Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000.
Notwithstanding anything contained in this Agreement
to the contrary, you do not release, remise or discharge the Company of or from
any claims which you may have under: (i) the Company's 401(k) plan, said plan
being governed by its plan documents and any amendments thereto; (ii) the
indemnification provisions contained in the Company's Articles of Incorporation
and/or Bylaws, and/or any indemnification agreement in your favor, relating to
indemnification of employees, officers and/or directors; (iii) the General
Corporation Law of the State of Delaware, the Pennsylvania Business Corporation
Law or any other applicable law or any insurance policy pursuant to which you
are indemnified or held harmless by reason of any action or failure to act as an
employee and/or officer; and, (iv) this Agreement. Furthermore, it is our
intention that you retain all rights you have to be insured, defended,
indemnified and held harmless in connection with any action or failure to act as
an employee and/or officer of the Company.
You agree that, while this release does not prevent
you from filing a charge with the Equal Employment Opportunity Commission
("EEOC") and/or participating in any such proceedings to challenge the knowing
and voluntary nature of this Agreement, you acknowledge that you have not filed
any such claims or commenced any action with any administrative agency or court
regarding any claims released in this Agreement.
Xxxxxxx X. Xxxxx
June 30, 2003
Page 4
In consideration of the promises in this Agreement,
the Company, and its agents, representatives, administrators, insurers,
attorneys, employees, successors and assigns ("Company Releasors") do hereby
release, remise and forever discharge you and your agents, representatives,
heirs, executors, administrators, insurers, attorneys, successors and assigns of
and from any and all claims, demands, causes of action, actions, rights,
damages, judgments, costs, compensation, suits, debts, dues, accounts, bonds,
covenants, agreements, expenses, attorneys' fees, damages, penalties, punitive
damages and liability of any nature whatsoever, in law or in equity or
otherwise, which the Company Releasors have had, now have, shall or may have,
whether known or unknown, foreseen or unforeseen, suspected or unsuspected, by
reason of any cause, matter or thing whatsoever, including those relating to
your employment with the Company and the termination of that employment to the
date of this Agreement.
(f) Intentionally left blank.
(g) You shall not at any time after the date of this letter
disparage or deprecate the Company or its affiliates or any of their officers,
directors, employees, stockholders or principals, or any of their operations,
assets, services, work product, character, motives or financial standing.
Further, you agree to keep the terms and conditions of this Separation Agreement
secret and confidential and not to disclose them voluntarily to any third party,
except to the extent required by law, to enforce the Separation Agreement or to
obtain confidential legal, tax or financial advice. The Company's management
agrees to abide by the same such requirement contained in this section as it
relates to you.
(h) You agree that you will return to the Company on your
Termination Date, all memoranda, notes, records, reports, manuals, drawings and
other documents (and all copies thereof whether in written form or on computer
disk or tape) relating to the business of the Company and/or its affiliates and
all property associated therewith, which you possess or have under your control
on such termination date. Without limiting the generality of the foregoing, you
agree to return to the Company all copies of all data bases containing
information about the Company and/or its affiliates, regardless of whether such
information is in hard copy or stored electronically or on tape. You agree that
on and after your Termination Date, you will not seek to access the information
systems of the Company or its affiliates for any purpose whatsoever.
(i) At all times after your Termination Date, you agree to
keep secret and retain in the strictest confidence all Confidential Information
and Trade Secrets of the Company learned by you heretofore or hereafter, and not
to use them for your own benefit or disclose them to anyone outside of the
Company, except as required for the performance of your duties as an employee of
the Company or with the Company's express written consent.
Xxxxxxx X. Xxxxx
June 30, 2003
Page 5
For purposes of this Agreement, "Confidential
Information" shall mean information disclosed to you or learned or made known to
you as a consequence of or through your employment by the Company, not generally
known in the industry in which the Company is or may become engaged, about the
Company's clients, customers, products, processes, and services, including, but
not limited to: information relating to research, development, source codes,
object codes or other technology-based information or products, inventions,
manufacturing, purchasing, accounting, engineering, marketing, merchandising,
and selling as well as lists of actual or prospective customers, customer
contacts, pricing strategy, sources of suppliers and materials, accounting
records, operating and cost data or other company financial information,
compilations of information, drawings, proposals, job notes, reports, records
and specifications, inventions, technology, patent applications and/or any other
proprietary information as may exist or be developed from time to time by the
Company or its affiliates. For purposes of this Agreement, "Trade Secret" means
the whole or any portion or phase of any scientific or technical information,
design, process, formula, or improvement which is secret and is not generally
available to the public, and which gives one who uses it an advantage over
competitors who do not know of or use it.
You shall not disclose or use in any manner, directly
or indirectly, and shall use your best efforts and shall take all reasonable
precautions to prevent the disclosure of, any such Trade Secrets or other
Confidential Information, except to the extent required in the performance of
your duties or obligations to the Company hereunder or by express prior written
consent of a duly authorized officer or director of the Company (other than
you).
(j) You agree that for a period of one (1) year after your
Termination Date, you shall not either directly or indirectly, on your own
behalf or in the service or on behalf of others, solicit, divert, or
appropriate, or attempt to solicit, divert, or appropriate, to any Competing
Business, any person or entity that was a customer or client of the Company at
any time during the 12-month period preceding such solicitation. For purposes of
this paragraph 2(i), a "Competing Business" is any business engaged in the sale
or provision of products and/or services comparable to the products and/or
services offered by the Company at any time during the term of your employment
by the Company.
(k) You agree that for a period of one (1) year after your
Termination Date, you shall not, either directly or indirectly, on your own
behalf or in the service or on behalf of others, solicit, divert or hire away,
or attempt to solicit, divert, or hire away, to any other business, any person
employed by the Company, whether or not such employee is a full-time employee or
a temporary employee of the Company and whether or not such employment is
pursuant to a written agreement and whether or not such employment is for a
determined period or is at will.
Xxxxxxx X. Xxxxx
June 30, 2003
Page 6
3. If you terminate your employment with the Company prior to October
31, 2003, your salary and benefits will terminate as of the date of your
termination, however, your right to the payments under paragraph 1(d) and (e)
above will remain unchanged. In addition, you understand that if you terminate
your employment before April 17, 2004, you will not be entitled to exercise any
of your options to acquire any shares of the Company's common stock, except for
any options that were vested and exercisable as of the date of such termination
in accordance with the terms of the stock option plan.
4. In order to receive the benefits contained in this Separation
Agreement, you will be required to sign and not revoke this Separation
Agreement. If you do not sign this Separation Agreement and/or if you revoke
this Separation Agreement, your employment will be deemed terminated effective
June 30, 2003 and you will not be entitled to any of the benefits described in
this Separation Agreement, including but not limited to any options to acquire
shares of the Company's common stock. In such event, you will be paid only those
wages and benefits earned through June 30, 2003.
5. Consistent with Company policy, and notwithstanding anything to the
contrary in this Separation Agreement, you understand that your final paycheck
for full-time employment will include payment for all accrued and unused
vacation.
6. This Separation Agreement sets forth our complete understanding and
agreement and supersedes all prior agreements between us, oral or written,
express or implied.
7. This Separation Agreement is being offered for the purpose of
assisting the Company and you in the transition. This Separation Agreement
should not be construed as an admission or concession of liability or wrongdoing
by the Company or by you.
Xxxxxxx X. Xxxxx
June 30, 2003
Page 7
8. If any provision of this Separation Agreement is deemed unlawful or
unenforceable by a court of competent jurisdiction, the remaining provisions
shall continue in full force and effect.
9. By your execution of this Separation Agreement, your represent,
warrant and agree to the following, each of which is material to the Company's
willingness to enter into this Separation Agreement:
(a) You have read carefully the terms of this Separation
Agreement, including the general release.
(b) You have had an opportunity to and have been encouraged to
review this Separation Agreement, including the general release, with an
attorney.
(c) You understand the meaning and effect of the terms of this
Separation Agreement, including the general release.
(d) You were given twenty-one days to determine whether you
wished to enter into this Separation Agreement, including the general release.
(e) The entry into and execution of this Separation Agreement,
including the general release, is your own free and voluntary act without
compulsion of any kind.
(f) No promise or inducement not expressed herein has been
made to you.
(g) This Separation Agreement shall be binding upon and inure
to the benefit of the Company's successors and assigns. This Agreement shall not
be assignable by you.
You have twenty-one (21) days to consider this offer. You are
encouraged to review this Separation Agreement with an attorney. If you agree
with the proposed terms as set forth above, please sign this Separation
Agreement indicating your understanding and agreement and the attached
Acknowledgment of Rights under the Older Workers Benefit Protection Act and
return them to me. The additional copies are for your records.
Please note that if you sign this Separation Agreement, you will retain
the right to revoke it for seven (7) days. To revoke the Separation Agreement,
you must send a certified letter to my attention. This letter must be
post-marked within seven (7) days of you execution of this Separation Agreement.
Xxxxxxx X. Xxxxx
June 30, 2003
Page 8
We wish you the best in the future.
Sincerely,
Neoware Systems, Inc
By: /S/Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
Understood and Agreed,
intending to be legally bound:
Xxxxxxx X. Xxxxx
/S/Xxxxxxx X. Xxxxx
Witness:______________________________
ACKNOWLEDGMENT OF RIGHTS UNDER
OLDER WORKERS BENEFIT PROTECTION ACT
I, XXXXXXX X. XXXXX, acknowledge that I have read and understand the
attached separation agreement and general release ("Separation Agreement"). I
further understand that this Separation Agreement is revocable by me for a
period of seven (7) days following execution thereof, and that this Separation
Agreement shall not become effective or enforceable until this seven-day
revocation period has ended.
I am aware that federal, state and local laws prohibit discrimination
against employees because of their race, color, religion, sex, age, national
origin, veterans status and disability and that any employee who believes that
he has been discharged or otherwise discriminated against for any of these
reasons has a right to file a lawsuit in court or initiate other proceedings
against the Released Parties and recover damages if it is proved that the
Released Parties violated any one of these laws.
I acknowledge that I have been encouraged to discuss the release
language in the Separation Agreement with an attorney prior to executing the
agreement and that I have thoroughly reviewed and understand the effect of the
release. I further acknowledge that I have been given twenty-one (21) days in
which to consider the Separation Agreement and that, if I sign the Separation
Agreement before the end of the twenty-one day period, I am doing so freely,
voluntarily and after having had full and fair opportunity to consult with my
retained counsel.
/S/Xxxxxxx X. Xxxxx Date:_______________
Xxxxxxx X. Xxxxx
