Separation Agreement
Between
Xxxxxxx Xxxxxxxx
And
Compaq Computer Corporation
Mr. Xxxxxxx Xxxxxxxx and Compaq Computer Corporation ("Compaq") have entered
into this Separation Agreement (the "Separation Agreement" or this "Agreement").
The parties agree as follows:
1. Other Agreements between the Parties. There exists between the parties:
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a Pension Contract dated December 18, 1986 (the "Pension Contract"); an
Indemnity Agreement dated December 18, 1986 (the "Indemnity Agreement"); and an
Employment Agreement dated as of January 1, 1992 (the "Employment Agreement").
Except as specifically identified in this Agreement, nothing in this Agreement
supercedes or amends the Pension Contract, the Indemnity Agreement, or the
Employment Agreement. There also exists a letter from Xx. Xxxxxx Xxxxxxx to Xx.
Xxxxxxxx dated April 18, 1999 (the "Letter"). The parties agree that upon the
execution of this Agreement, the Letter shall become null and void. The parties
further agree that, except as to stock option grants previously made by Compaq
to Xx. Xxxxxxxx, that the Pension Contract, the Employment Agreement, and this
Agreement shall constitute the entire agreements between the parties and control
all rights and obligations between the parties.
2. Employment Agreement Triggered. The parties agree that events have
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occurred that entitle Xx. Xxxxxxxx to the Separation Payment provided for in
Section 9.1 of the Employment Agreement. The parties agree that Xx. Xxxxxxxx'x
employment terminated by his resignation effective April 18, 1999 (the
"Termination Date").
3. Purpose of this Agreement. The parties intend this Agreement to
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memorialize certain obligations they have agreed to that relate to the
termination of Xx. Xxxxxxxx'x employment with Compaq. Additionally, the parties
intend this Agreement to satisfy conditions that Section 9.1 of the Employment
Agreement placed on Xx. Xxxxxxxx'x entitlement to the Separation Payment.
4. RELEASE AND WAIVER OF ALL CLAIMS. Xx. Xxxxxxxx xxxxxxx, waives, releases
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and gives up any and all rights, claims and causes of action which Xx. Xxxxxxxx
has or may have against Compaq (for purposes of this Release, "Compaq" includes
Compaq Computer Corporation, its subsidiaries and other affiliated entities (the
"Group") and all directors, officers, employees, and agents of the Group), of
any kind or character, in contract, tort, or otherwise, based on actions or
omissions occurring in the past and/or present, and regardless of whether known
or unknown to Xx. Xxxxxxxx at this time, including those not specifically
mentioned in this Release. Among the rights, claims, and causes of action which
Xx. Xxxxxxxx gives up under this Release are those arising in connection with
Xx. Xxxxxxxx'x employment and the termination of his employment, including
rights or claims under federal, state and local fair employment practice or
discrimination laws (including the various Civil Rights Acts, the Age
Discrimination in Employment Act, the Equal Pay Act, and the Texas Commission on
Human Rights Act), laws pertaining to breach of employment contract, wrongful
termination or other wrongful treatment, and any other laws or rights relating
to Xx. Xxxxxxxx'x employment with Compaq and the termination of that employment.
Xx. Xxxxxxxx acknowledges that he is aware of his rights under the Age
Discrimination in Employment Act, and that he is waiving and releasing any claim
of age discrimination which he may have under that statute as part of this
Release. Xx. Xxxxxxxx agrees not to bring or join any lawsuit or file any claim
against Compaq in any court or before any governmental agency relating to his
employment or the termination of his employment. This Release does not waive or
release any rights, claims, or causes of action that Xx. Xxxxxxxx may have with
respect to indemnification under Section 145 of the Delaware General Corporation
Law or any successor statute, under the Indemnification Agreement and under
Article X of the Bylaws of Compaq in effect on the date of this Release; and any
amendment of Compaq's Bylaws subsequent to the date of this Release shall not
modify or reduce the rights of Xx. Xxxxxxxx. This Release does not waive or
release any rights, claims, or causes of action that may arise from (a) Xx.
Xxxxxxxx'x stock options granted by Compaq, the Pension Contract, any other
retirement benefits accrued to Xx. Xxxxxxxx or any other benefit programs for
which Xx. Xxxxxxxx is eligible or (b) acts or omissions occurring after the date
this Release is executed. Xx. Xxxxxxxx acknowledges that Compaq has, by this
sentence, advised him to consult an attorney before signing this Agreement. Xx.
Xxxxxxxx further acknowledges that he has a period of at least 21 days in which
to consider whether to sign this Agreement. Xx. Xxxxxxxx further acknowledges
that, should he execute this Agreement, he will have seven days in which to
revoke such execution by delivering a written revocation to Compaq to the
attention of the General Counsel.
5. Non-Competition Obligations. As an independent covenant, Xx. Xxxxxxxx
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agrees that for a period of 24 months following the Termination Date, Xx.
Xxxxxxxx shall not, directly or indirectly, in any state of the United States or
in any foreign country where any of Compaq, its subsidiaries, or affiliated
entities (collectively "Group") is conducting business as of the Termination
Date, engage, or render advice, or otherwise assist any person or entity, or
division or department of any corporation, which is primarily engaged, in the
design, engineering, manufacturing, marketing, sales, service, networking or
integration of (a) microprocessor based computers (including, but not limited
to, towers, desktops, portables, laptops, notebooks, palm tops and writing
tablets), (b) workstations, (c) servers, (d) any other equipment that is
designed to run any version of DOS, UNIX, OS/2, Microsoft New Technology (NT),
XxxXxx, Novell Netware, or Banyan (e) options, accessories, spare parts and
subsystems for items (a) through (d) inclusive. Subsystems shall not be
construed to extend to components such as memory chips, standard cells for
application specific integrated circuits and gate arrays, and other electronic
components. This covenant shall not preclude Xx. Xxxxxxxx: (1) from owning as a
shareholder less than 5% of the shares of a corporation whose shares are traded
on the stock exchange or in the over-the-counter market by a member of the
National Association of Securities Dealers; (2) from employment or consulting in
any capacity with Microsoft, Novell, Banyan, Unix Systems Laboratory, Santa Xxxx
Operations, and Open Software Foundation; or (3) from employment or consulting
with a software developer who happens to integrate or network its software with
equipment covered by this covenant.
5.1. Acknowledgement of Remuneration. Xx. Xxxxxxxx understands that the
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foregoing restrictions may limit his ability to engage in a business similar to
Compaq's business during the period provided for above, but acknowledges that he
will receive sufficient remuneration in association with this Agreement and the
Employment Agreement to justify such limited restrictions.
5.2. Modification by Court. It is expressly understood and agreed that
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Compaq and Xx. Xxxxxxxx consider the restrictions contained in this Article 5 to
be reasonable and necessary for the purposes of preserving and protecting the
business, goodwill, and proprietary information of Compaq. Nevertheless, if any
of the aforesaid restrictions are found by a Court having jurisdiction to be
unreasonable or over-broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions set forth herein to be
modified by such Court so as to be reasonable and enforceable and, as so
modified by the Court, to be fully enforced. Compaq shall be entitled to
enforce the provisions of this Article 1 by resorting to appropriate legal and
equitable action.
6. Non Solicitation Obligations. Xx. Xxxxxxxx agrees that for a period of
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two years following the Termination Date, he shall not, directly or indirectly,
for himself or for others, in any State of the United States or in any foreign
country where the Group is conducting business as of the Termination Date:
6.1. solicit, request or induce (a) any employee of the Group to terminate
his employment with Compaq or such subsidiary or affiliate, or (b) any customer,
contractor or representative having a business relationship with the Group to
terminate such business relationship; or
6.2. Directly or indirectly employ, hire, or otherwise retain any individual
who was employed by the Group within the immediately preceding six months before
employment by Xx. Xxxxxxxx or any entity of which he is an employee without
first notifying Compaq in writing at least ten working days prior to such
employment. Xx. Xxxxxxxx'x written notification to Compaq shall describe the
proposed capacity in which such individual shall be retained, hired, or
otherwise employed in sufficient detail for Compaq to determine whether such
employment is likely to adversely impact relationships between Compaq and its
employees, customers, contractors, suppliers, or representatives, or jeopardize
Compaq's goodwill and proprietary information.
6.3. It is expressly understood and agreed that Compaq and Xx. Xxxxxxxx
consider the restrictions contained in this Article 6 to be reasonable and
necessary for the purposes of preserving and protecting the relationship between
Compaq and its employees, customers, contractors, suppliers, and
representatives, as well as Compaq's goodwill and proprietary information.
Nevertheless, if any of the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, overbroad or otherwise unenforceable, the
parties intend for the restrictions set forth herein to be modified by such
court so as to be reasonable and enforceable and, as so modified by the court,
to be fully enforced.
7. Consideration. The parties agree that the Separation Payment Compaq will
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make to Xx. Xxxxxxxx under Section 9.1 of the Employment Agreement and the
vesting of stock options provided under Section 9.5 of the Employment Agreement
provide consideration to Xx. Xxxxxxxx for his Release and for his assumption of
the Non-Competition and Non-Solicitation Obligations in this Agreement. The
parties further agree that in satisfaction of its obligations under Section 9.1
of the Employment Agreement Compaq will pay to Xx. Xxxxxxxx the sum of
$6,400,000.00 subject to the terms and conditions of the Employment Agreement
and this Agreement. As additional consideration to Xx. Xxxxxxxx for his Release
of Claims and for assuming the Non-Competition and Non-Solicitation obligations,
Compaq agrees:
7.1. Computers and Other Equipment. Compaq grants ownership to Xx. Xxxxxxxx
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of all Compaq computers and other electronic equipment (e.g. fax machines,
printers, or power supplies, etc.) assigned to Xx. Xxxxxxxx and which is now in
his possession. As a condition of Compaq's transfer of ownership, Xx. Xxxxxxxx
agrees to delete all software that is licensed to Compaq immediately Xx.
Xxxxxxxx acknowledges that he and Compaq are obligated to comply with the
license terms under which the software was made available to Xx. Xxxxxxxx as a
Compaq employee. Xx. Xxxxxxxx agrees to indemnify Compaq against any and all
claims, including attorney's fees, arising from any alleged violation of any
license based on Xx. Xxxxxxxx'x failure to remove Compaq licensed software from
computers or equipment transferred to Xx. Xxxxxxxx under this Agreement.
7.2. Financial Advising Fees. In addition to other payments to Xx. Xxxxxxxx
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under the Employment Agreement or this Agreement, Compaq will pay Xx. Xxxxxxxx
$5,000 as reimbursement for fees for financial advising services
7.3. Long-term Bonus Payment. Upon the execution of this Agreement and in
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addition to other payments to Xx. Xxxxxxxx under the Employment Agreement or
this Agreement, Compaq will pay Xx. Xxxxxxxx $ 3,408,825.00 as the balance of
his long-term bonus account.
7.4. Extension of Option Exercise Period. The parties have agreed that, as
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additional consideration for Xx. Xxxxxxxx to execute this Agreement, the period
of time that Xx. Xxxxxxxx shall have to execute certain stock options will be
amended.
7.4.1. Paragraph 9.5 of the Employment Agreement is amended to read as
follows:
In the event that the Company shall be obligated to deliver the
Severance Payment to Xx. Xxxxxxxx, Xx. Xxxxxxxx shall, effective as
of the Termination Date, (a) be fully vested in all options to acquire
shares of Company stock previously granted by the Company to Xx.
Xxxxxxxx, and (b) unless otherwise restricted by the applicable
Company stock option plan or by law, the period during which Xx.
Xxxxxxxx shall have the right to exercise stock options granted under
any stock option agreements between the Company and Xx. Xxxxxxxx shall
be extended to four calendar years immediately following the
Termination Date.
7.4.2. Xx. Xxxxxxxx acknowledges that, under the applicable stock option
plan(s), all grants expire on the tenth anniversary of the grant date. Xx.
Xxxxxxxx acknowledges that this limitation will reduce his period to exercise
certain options to less than four years. A schedule of Xx. Xxxxxxxx'x
outstanding stock option grants that indicates the termination date for each
grant is attached to this letter.
8. Terms Incorporated by Reference. The parties have previously negotiated
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certain terms in the Employment Agreement. The parties wish to incorporate
those terms in this Agreement as though fully set forth in this Agreement. The
parties incorporate into this Agreement the following Articles and paragraphs of
the Employment Agreement: Article 10 (Notices); Article 11 (Controlling Law);
paragraphs 12.2 (Court Modification), 12.3 (Validity), and 12.4 (Construction);
Article 13 (Assumption of Obligations); Article 14 (Effect of Agreement);
Article 15 (Waiver of Breach); and Article 17 (Paragraph Headings).
9. Irreparable Harm. Xx. Xxxxxxxx agrees that his breach of any of the
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provisions of Articles 4, 5, or 6 of this Agreement will result in irreparable
harm to Compaq and that no adequate remedy at law is available. Xx. Xxxxxxxx
agrees that upon a breach or violation of any provision of Articles 4, 5, or 6,
Compaq shall be entitled to injunctive relief in any court of competent
jurisdiction. Nothing herein shall be construed as prohibiting Compaq from
pursuing any other remedies at law or at equity available to Compaq for breach
or threatened breach.
10. Modification in Writing. No addition to, or modification of, this
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Agreement shall be effective, unless it is in writing and signed by both
parties.
11. Execution. This Agreement may be executed in multiple counterparts,
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each of which shall be deemed an original and all of which shall constitute one
instrument.
12. No oral representations. Each party acknowledges that, in deciding to
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execute this Agreement, it is relying solely on the contents of this Agreement,
the Employment Agreement, the Pension Contract, and the Indemnity Agreement.
Each party acknowledges that it is not relying on any oral representation that
is not captured in writing in one of the agreements between the parties.
Xx. Xxxxxxxx agrees that he has read this Agreement, consulted with an attorney
of his choice, understands the impact of this Agreement on his rights and
obligations, and is knowingly and voluntarily entering into this Agreement.
IN WITNESS WHEREOF, executed this 4 day of August 1999 and effective seven
days thereafter if not revoked by Xx. Xxxxxxxx.
Compaq Computer Corporation
By: /s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxxx Xxxxxxxx
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Xxxxxx X. Xxxxxxx Xxxxxxx Xxxxxxxx
Senior Vice President and
General Counsel
