Exhibit 10.14
SEVERANCE AGREEMENT, GENERAL RELEASE AND
COMPROMISE AND CONSULTING AGREEMENT ("Agreement")
For good and valuable consideration, receipt of which is hereby
acknowledged, and in order to resolve and settle finally, fully and completely
any and all matters and disputes that may exist between them, the parties agree
as follows:
1. In exchange for the promises contained in this Agreement, XXXXXX X.
XXXXXXX, his heirs, representatives, successors, beneficiaries and assigns
(hereinafter referred to collectively as "Xxxxxxx"), hereby waives, releases and
discharges, and agrees that he will not institute, prosecute or pursue, any and
all complaints, claims, demands, suits, actions and causes of action, whether in
law or in equity, which he asserts or could assert at common law or under any
statute, rule, regulation, order, or law, whether federal, state or local, or on
any grounds whatsoever, against OBJECTIVE SYSTEMS INTEGRATORS, INC., and/or any
of its current or former owners, officials, directors, officers, shareholders,
affiliates, agents, representatives, servants, employees, successors, attorneys,
subsidiaries, parents, predecessors, divisions, branches, employee benefit
plans, and assigns (hereinafter referred to as "OSI"), with respect to any
event, matter, claim, damages or injury, of any kind whatsoever, arising at any
time prior to execution of this Agreement by Xxxxxxx. The claims which are
hereby waived, released and discharged by Xxxxxxx include, but are not limited
to, all rights or claims under the Age Discrimination in Employment Act, 29
U.S.C.[ ]621 et seq.
2. As a further consideration and inducement for this Agreement, Xxxxxxx
hereby waives all rights under Section 1542 of the California Civil Code or any
analogous state, local or federal law, statute, rule, order or regulation.
California Civil Code Section 1542 reads as follows: 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.
Notwithstanding the quoted paragraph, Xxxxxxx hereby expressly agrees that this
Agreement shall extend to and apply to all unknown, unsuspected and
unanticipated injuries and damages, as well as those that are now known or
suspected, which have arisen on or before the date of execution of this
Agreement.
3. In exchange for the promises contained in this Agreement, OSI hereby
waives, releases and discharges, and agrees that it will not institute,
prosecute or pursue, any and all complaints, claims, demands, suits, actions,
and causes of action, whether in law or in equity, which it or they assert or
could assert at common law or under any statute, rule, regulation, order, or
law, whether federal, state or local, or on any grounds whatsoever, against
Xxxxxxx, with respect to any event, matter, claim, damages, or injury, of any
kind whatsoever, arising at any time prior to execution of this Agreement, by
OSI. The claims which are hereby waived, released, and discharged by OSI
include, but are not limited to, all rights or claims arising out of or relating
to the employment relationship between Xxxxxxx and OSI.
4. As a further consideration and inducement for this Agreement, OSI
hereby waives all rights under Section 1542 of the California Civil Code or any
analogous state, local or federal law, statute, rule, order or regulation.
California Civil Code Section 1542 reads as follows: 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.
Notwithstanding the quoted paragraph, OSI hereby expressly agrees that this
Agreement shall extend to and apply to all unknown, unsuspected and
unanticipated injuries and damages, as well as those that are now known or
suspected, which have arisen on or before the date of execution of this
Agreement.
5. The parties hereby agree and understand, as the following terms are
generally used and interpreted, that:
(a) Immediately following his separation from OSI, OSI will retain Xxxxxxx
as an independent consultant. From April 21, 1997 through December 31, 1997, the
rate of compensation for duties performed as an independent consultant will be
equal to Xxxxxxx'x base salary rate of $350,000 per year. Such compensation
shall be paid periodically in accordance with normal Company payroll practices
and subject to the usual required withholding. As an independent consultant,
Xxxxxxx will retain, through December 31, 1997, all the medical and insurance
benefits, including long term disability, he enjoyed as an employee of OSI.
Thereafter, to ensure that the option to purchase the shares of OSI Common
Stock, identified below in subsections (d)(e) and (f), remain valid and in
effect, OSI will retain Xxxxxxx as an independent consultant, at a fee of $1.00
per year, without any additional benefits, for the remaining vesting period of
each of the separate stock options as provided for in the applicable stock
option plan. In return, Xxxxxxx will perform such duties for OSI during this
period as reasonably requested by OSI.
(b) Twenty-one (21) business days after the execution of this Agreement by
Xxxxxxx, Xxxxxxx shall also receive as severance One Million Dollars
($1,000,000.00), less all legally mandated withholding, in full compromise of
any claim or potential claim as set forth above. Said severance payment is in
lieu of the severance payments identified in Section 6(i) of the Employment
Agreement attached hereto as Exhibit A, and any accrued vacation pay. Upon
receipt of said amount by Xxxxxxx, OSI's obligation to provide severance
payments pursuant to Section 6(i) of the Employment Agreement will be fully
satisfied.
(c) Xxxxxxx'x restricted stock grant of 33,077 shares of OSI Common Stock,
as set forth in Section 4(b)(ii) of the Employment Agreement and the Restricted
Stock Award Agreement (attached hereto as Exhibit B), is currently 100% vested
as of July 20, 1996, notwithstanding the provisions of OSI's 1994 Stock Option
Plan, amended August 14, 1995. (Attached hereto as Exhibit C.) The certificates
confirming ownership of the restricted stock grant of 33,077 shares of OSI
Common Stock will be transferred to Xxxxxxx within twenty-one (21) business days
after execution of this Agreement.
(d) Xxxxxxx'x option to purchase 240,000 shares of OSI Common Stock at
$13.00 per share shall remain valid and in effect pursuant to the terms of the
1994 Stock Option Agreement executed November 29, 1995. (Attached hereto as
Exhibit D, including Attachments A and B thereto). The aforesaid stock options
shall continue to vest according to the vesting schedule set forth in said Stock
Option Agreement.
(e) Xxxxxxx'x option to purchase 200,000 shares of OSI Common Stock at
$25.50 per share as of July 20, 1996, shall remain valid and in effect pursuant
to the terms of the Stock Option Agreement executed August 13, 1996. (Attached
hereto as Exhibit E, including Attachments). The aforesaid stock options shall
continue to vest according to the vesting schedule set forth in said Stock
Option Agreement.
(f) Xxxxxxx'x option to acquire the 50,000 shares of OSI Common Stock
pursuant to the Employment Agreement and the Stock Option Agreement (attached
hereto as Exhibit F), executed November 7, 1995, shall remain valid and in
effect pursuant to the terms of said Stock Option Agreement. The aforesaid stock
options shall continue to vest according to the besting schedule set forth in
said Stock Option Agreement and sections 8(c) and 10 of the 1995 Director Option
Plan. (Attached hereto as Exhibit G.)
//
(g) Within twenty-one (21) business days after the execution of this
Agreement, Xxxxxxx will have listed his Granite Bay house (the "House") for
sale. Xxxxxxx agrees to use his best efforts to sell the house subject to
reasonable terms and at a price reflective of its market rate value at the time
of the sale. In connection with the foregoing, OSI will do one of the following,
as applicable: (1) if the House is not subject to a contract for sale entered
into before December 31, 1997, OSI will promptly thereafter arrange for its
purchase by a reputable relocation company and will reimburse Xxxxxxx, at the
time of closing, for any capital loss he may suffer on his sale of the House,
based on an agreed capital basis of $757,500; (2) if the House is subject to a
contract for sale entered into before December 31, 1997, OSI will reimburse
Xxxxxxx, at the time of closing, for any capital loss he may suffer on his sale
of the House, based on an agreed capital basis of $757,500. In either event, all
closing costs will be for Xxxxxxx'x account and any payments made by OSI to
Xxxxxxx related to this item will be grossed up for federal income tax purposes.
(h) OSI will pay for the relocation of Xxxxxxx'x personal possessions to
such location in the continental United States as he may choose. Any payment to
Xxxxxxx related to this item will be grossed up for federal income tax purposes.
(i) OSI will pay, as they become due, the four remaining premium payments
(each approximately $5,800) on Xxxxxxx'x existing One Million Dollar
($1,000,000.00) life insurance policy. Any income imputed to Xxxxxxx for this
item will be grossed up for federal income tax purposes.
(j) In the event of a change of control of OSI, as defined herein,
Xxxxxxx'x stock options, as identified above in Section 5(c)(d)(e) and (f),
shall immediately become 100% vested. Upon said vesting of the identified stock
options pursuant to a change in ownership, Xxxxxxx will have the opportunity to
exercise the options pursuant to the terms of the appropriate governing stock
option plan. For purposes of this Agreement, the following terms have the
meanings as set forth below:
(i) A "Change in Control" will occur if (1) any person, as
that term is used in Section 13(d) and 14(d)(2) of the Securities and Exchange
Act of 1934 ("Exchange Act"), other than OSI, is or becomes the beneficial
owner, as defined in Rule 13(d)3 under the Exchange Act, directly or indirectly
(including by holding securities which are exercisable for or convertible into
shares of capital stock of OSI, of 50% or more of the combined voting power of
the outstanding shares of capital stock of OSI entitled to vote generally in the
election of directors (calculated as provided in Rule 13(d) under the Exchange
Act in the case of rights to acquire capital stock), whether by means of a
tender offer or exchange offer, a Transaction or otherwise, (2) a Transaction is
consummated, (3) the Continuing Directors at any time during the term of this
Agreement, for any reason including, but not limited to, resignation, removal,
death, or disability of a Continuing Director or an increase in the number of
members of the Board, fail to constitute a majority of the Board, or (4) a
majority of OSI's Outside Directors determine that a Change of Control has
occurred. Notwithstanding the foregoing, a "Change in Control" will not be
deemed to have occurred in respect of any transfer of stock ownership within or
among the Xxxxxxx family or the Vento Family, respectively, provided that, both
before and after the transfer, either Xxx X. Xxxxxxx or Xxxxxxx X. Xxxxx retain
the sole right to vote such shares in all matters related to OSI.
//
(ii) A "Continuing Director" is (1) a member of the Board
serving on January 1, 1997, other than Xxxxxxx or (2) a person thereafter
elected by shareholders or appointed by the Board whose election, appointment or
recommendation by the Board was approved by at least a majority of the
Continuing Directors then serving on the Board.
(iii) "Disability" means that the Officer, in the reasonable
judgment of the Board, is incapable or performing the duties of his office by
reason of illness or physical or mental disability, where the condition has
continued for a period of more than three consecutive months.
(iv) "Xxxxxxx Family" is Xxx X. Xxxxxxx, Xxxxx Xxxxxxx, any
descendant of either, including by adoption, and any legal entity of which Xxx
X. Xxxxxxx exercises sole voting power and control.
(v) "Vento Family" is Xxxxxxx X. Xxxxx, Xxxx X. Xxxxx, any
descendant of either, including by adoption, and any legal entity of which
Xxxxxxx X. Xxxxx exercises sole voting power and control.
(vi) "Outside Director" is a person other than Xxx X. Xxxxxxx
and Xxxxxxx X. Xxxxx, who is not, and who during the past six months was not, an
employee or officer of OSI.
(vii) A "Transaction" is (1) a consolidation or merger
involving OSI, other than a merger solely to effect a reincorporation or a
merger as to which stockholder approval is not required under Sections 251(f) or
253 of the Delaware General Corporation Law, (2) a sale, lease, exchange or
other transfer (in one transaction of a series of related transactions) of 50%
or more of OSI's assets, or (3) the adoption of any plan or proposal for the
liquidation of dissolution of OSI.
(k) Should any OSI stock options be repriced at any time, Xxxxxxx will not
be eligible to receive, nor will he accept, the benefit of any such repricing.
6. Xxxxxxx and OSI understand and agree that this Agreement, and each and
every provision hereof, is confidential and shall be maintained in strictest
confidence except as to reasonably announce Xxxxxxx'x departure from OSI. It is
further agreed that neither party will disclose the amount of settlement nor any
other provision of this Agreement except for Xxxxxxx'x departure from OSI, to
any
other person, firm, organization or entity, of any and every type, public or
private, including, but not limited to, news media, for any reason, at any time,
except as required by law. Moreover, OSI and Xxxxxxx agree that neither party
will undertake any course of action or make any representation about the other
that will harm or damage the reputation of the other party.
7. Xxxxxxx warrants and represents that he has the full right, title and
interest in and to the claims being released herein, that no other entity has
any lien or other interest therein, or in the payments referred to in Paragraph
5, above.
8. OSI agrees to indemnify Xxxxxxx pursuant to the terms of the
Indemnification Agreement entered into on or about January 18, 1997. (Attached
hereto as Exhibit H.)
9. The acceptance of the Agreement is expressly conditioned on each
party's approval of any press releases published or disseminated by either party
with respect to Xxxxxxx'x separation of employment from OSI. Neither party shall
unreasonably withhold approval of any pending press release.
10. The prevailing party in any action brought to enforce the terms of
this Agreement, or to cure or remedy any breach thereof, shall be entitled to
costs and reasonable attorneys' fees.
11. Xxxxxxx has read this Agreement and represents that he fully
understands and appreciates the meaning of each of its terms. He also
acknowledges that he has consulted with an attorney regarding its terms prior to
executing this Agreement. Xxxxxxx also understands that he may take twenty-one
(21) days in which to consider this Agreement before executing it, and that
after executing it, he will have seven (7) days following the date of its
execution in which he may revoke this Agreement by promptly delivering written
notice to OSI and by returning to OSI any portion of the consideration set forth
in paragraph 5, above, which may have been paid to him. The parties acknowledge
that this Agreement shall not become effective or enforceable until after the
expiration of the seven (7) day revocation period and that Xxxxxxx is not
entitled to retain any consideration hereunder if he revokes this Agreement
prior thereto.
12. The parties to this Agreement represent that this Agreement may be
used as evidence in a subsequent proceeding in which any of the parties allege a
breach of this Agreement, or seek to enforce the provisions of this Agreement.
13. This Agreement constitutes the complete understanding between Xxxxxxx
and OSI and supersedes any and all prior agreements, promises or inducements, no
matter what its or their form, concerning its subject matter. No promises or
agreements made subsequent to the execution of this Agreement by these parties
shall be binding unless reduced to writing and signed by authorized
representatives of these parties.
14. Xxxxxxx represents that he has not filed any complaints, claims or
actions against OSI, or their agents or assigns, including OSI's officers,
agents, directors, supervisors, employees, or representatives with any state,
federal, or local agency or court, that he will not do so at any time hereafter
for any act which occurred prior to signing this Agreement, and that if he did,
he will withdraw any such charges which may have been filed.
15. Should any provision of this Agreement be declared or be determined by
a court of competent jurisdiction to be wholly or partially illegal, invalid, or
unenforceable, the legality, validity and enforceability of the remaining parts,
terms or provisions shall not be affected thereby, and said // illegal,
unenforceable or invalid part, term, or provision shall be deemed not to be part
of this Agreement.
16. This Agreement shall be governed by and construed in accordance with
the laws of the State of California applicable to contracts entered into herein,
and with this Agreement.
DATED: April 19, 1997.
/s/ Xxxxxx X. Xxxxxxx
XXXXXX XXXXXXX
DATED: April 19, 1997. OBJECTIVE SYSTEMS /s/ Xxxxxx X. Xxxxxxx
INTEGRATORS, INC.
By:
Its: Vice President and General Counsel
307A"Xxxxxxx No. 2"
