EXHIBIT 10.1
SEPARATION AGREEMENT AND MUTUAL LIMITED RELEASE
THIS SEPARATION AGREEMENT AND MUTUAL LIMITED RELEASE (hereinafter
referred to as this "Agreement") is made and entered into by and between Xxxx
Xxxxxx (hereinafter referred to as "Employee") and LEVEL 8 SYSTEMS, INC.
(hereinafter referred to as the "Company").
STATEMENT OF TERMS
Employee and the Company have agreed that as of the Effective Date,
Employee's employment with the Company, including his position as President of
the Company, will end; provided, however, that Employee shall remain a member of
the Company's Board of Directors in accordance with the Bylaws of the Company
and further provided that the Company shall use its reasonable best efforts to
remove employee as an officer and director in any foreign subsidiaries of the
Company as soon as reasonably practicable. Subject to withholding for applicable
payroll taxes for such payments and for payments pursuant to Paragraph 4, if
necessary, the Company, on the Effective Date, shall pay to Employee salary and
benefits through such date. Employee and Company desire to accept this
Agreement, including, without limitation, additional consideration in return for
the limited release and other agreements set forth below. In addition, Employee
and the Company want to settle fully and finally certain differences and
disputes between them, including, but in no way limited to, any differences and
disputes that might arise, or have arisen, out of Employee's employment with and
separation from the Company.
In consideration of the premises and mutual promises herein contained,
it is agreed as follows:
1. NON-ADMISSION OF LIABILITY OR WRONGFUL CONDUCT
a. This Agreement shall not in any way be construed as an admission by
the Company that it has acted wrongfully with respect to Employee or any other
person, or that Employee has any rights whatsoever against the Company. The
Company specifically disclaims any liability to or wrongful acts against
Employee or any other person, on the part of itself, its employees, its members
or its agents.
b. This Agreement shall not in any way be construed as an admission by
the Employee that he has acted wrongfully with respect to the Company or any
other person, or that the Company has any rights whatsoever against the
Employee. Employee specifically disclaims any liability to or wrongful acts
against the Company or any other person.
2. EFFECTIVE DATE
The Effective Date of this Agreement shall be the eighth (8th) day
after the date on which Employee signs this Agreement.
3. NO CLAIMS
Employee and the Company represent that they have not filed, nor
assigned to others the right to file, nor are there pending to their knowledge,
any administrative complaints or lawsuits against the other with any federal,
state or local governmental agency or any court. Employee and the Company
represent that as of the Effective Date of this Agreement, they have no
knowledge of any claim, or any basis for a claim, against the other, arising
prior to Employee's employment with the Company.
4. CONSIDERATION
In full consideration and as material inducement for Employee to
execute this Agreement the Company will:
a. As of the Effective Date, forgive the remaining $32,500 of
indebtedness remaining under that certain promissory note
dated January 27, 2001, made by Employee in favor of the
Company. Employee's tax liability on the forgiveness of
indebtedness shall be withheld from payments made pursuant to
(b) and (d) below.
b. As of the Effective Date, pay Employee $7,044.23 for unused,
accrued vacation days less applicable withholdings.
c. Immediately upon execution of this Agreement, vest all
Employees' outstanding but currently unvested stock options
held under the 1997 Level 8 Systems, Inc. Stock Option Plan.
Employee shall have twelve (12) months from the Effective Date
of this Agreement to exercise 204,300 stock options at the
original exercise price of $1.74. The shares of common stock
issuable upon exercise of such options will be registered for
resale under Form S-8 and pursuant to the Securities Act of
1933, as amended (the "Securities Act") and the issuance of
such shares by the Company to employee will be exempt (and the
options were exempt) from the provisions of Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), under Rule 16b-3 promulgated under the Exchange Act by
the U.S. Securities and Exchange Commission (the "SEC").
Employee's additional 310,000 stock options at exercise prices
of $5.87 and $6.10 shall be forfeited to the Company at the
Effective Date of this Agreement.
d. Within fourteen (14) days of the Effective Date, issue to
Employee 100,000 shares of the Company's common stock, $.001
par value per share, less applicable withholdings of shares.
Such shares shall be issued pursuant to the Company's 1995
Stock Option Plan and be, at the time of issuance, registered
for resale under Form S-8 and pursuant to the Securities Act.
The issuance of such shares by the Company to employee are
exempt from the provisions of Section 16(b) of the Exchange
Act, under Rule 16b-3 promulgated under the Exchange Act by
the SEC.
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e. The Company shall reimburse Employee, in accordance with the
Company's standard policies and procedures for reimbursement,
for Employee's business expenses incurred through the
Effective Date
5. EMPLOYMENT AGREEMENT
Employee understands and agrees that the covenants contained in
Sections 10 (Non-Disclosure of Proprietary Information), 11 (Non-Solicitation
Covenants), 12 (Existing Restrictive Covenants), 13 (Return of Proprietary
Information), and 14 (Proprietary Rights) of that certain Employment Agreement
dated January 1, 2002, by and between Employee and the Company (the "Employment
Agreement"), attached hereto as Exhibit A, shall survive the termination of
Employee's employment and Employment Agreement. Notwithstanding anything to the
contrary contained herein or in the Employment Agreement, to the extent that the
survival of the covenants contained in the Employment Agreement conflict or are
inconsistent with Employee's or any of Employee's affiliates' rights, interest
and title in and to the Assets (as defined in the Asset Purchase Agreement) or
Employee's ability to solicit clients/customers, vendors and employees
associated with the Assets, the provisions of this Paragraph 5 and the
Employment Agreement shall not apply.
6. NON-DISPARAGEMENT; PRESS RELEASE
The parties agree that they will not make or issue, or procure any
person, firm, or entity to make or issue, any statement in any form to any
person or entity if such statement is harmful to or disparaging of the other
party, or, in the case of the Company, its affiliates, any of their employees,
officers, directors, agents, or representatives, or, in the case of Employee,
Starquest Ventures, Inc., its affiliates, any of their employees, officers,
directors, agents, or representatives. The parties further expressly agree not
to permit, and to be liable for, any statements made by an executive officer of
the Company or its affiliates (in the case of the Company) or by an executive
officer of Starquest Ventures, Inc. or its affiliates (in the case of Employee)
in any form to any person or entity if such statement is harmful to or
disparaging of the other party. The parties agree to issue the press release
attached hereto as Exhibit B on the Effective Date or at such date thereafter as
agreed by the parties.
7. MUTUAL LIMITED RELEASE
a. As a material inducement to the Company and Employee to enter into
this Agreement, Employee hereby irrevocably and unconditionally releases,
acquits, forever discharges and covenants not to xxx the Company and each of the
owners, stockholders, predecessors, successors, assigns, agents, directors,
officers, employees, representatives, attorneys, parent companies, divisions,
subsidiaries and affiliates of the Company (and agents, directors, officers,
employees, representatives and attorneys of such parent companies, divisions,
subsidiaries and affiliates), and all persons acting by, through, under or in
concert with any of them (collectively the "Company Releasees," and, excluding
the Company, the "Additional Releasees"), or any of them, from any and all
charges, complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorneys' fees and costs actually
incurred) of any
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nature whatsoever, known or unknown, suspected or unsuspected, from the date of
Employee's initial employment with the Company through the Effective Date of
this Agreement, including, but not limited to, rights arising out of alleged
violations or breaches of any contracts, express or implied, or any tort or any
federal, state or other governmental statute, regulation, or ordinance,
including, without limitation: (1) Title VII of the Civil Rights Act of 1964, as
amended by the Civil Rights Act of 1991 (race, color, religion, sex, and
national origin discrimination); (2) the Employee Retirement Income Security Act
("ERISA"); (3) 42 U.S.C. (S) 1981 (discrimination); (4) the Americans with
Disabilities Act (disability discrimination); (5) the Age Discrimination in
Employment Act; (6) the Older Workers Benefit Protection Act; (7) the Equal Pay
Act; (8) Executive Order 11246 (race, color, religion, sex, and national origin
discrimination); (9) Executive Order 11141 (age discrimination); (10) Section
503 of the Rehabilitation Act of 1973 (disability discrimination); (11)
negligence; (12) negligent hiring and/or negligent retention; (13) intentional
or negligent infliction of emotional distress or outrage; (14) defamation; (15)
interference with employment; (16) wrongful discharge; (17) invasion of privacy;
or (18) violation of any other legal or contractual duty arising under the laws
of the State of North Carolina, the laws of the State of California, the laws of
any other state(s), or the laws of the United States, which Employee now has,
owns or holds, or claims to have, own or hold, or which Employee at any time
heretofore had, owned or held, or claimed to have, at any time up to and
including the Effective Date of this Agreement; provided, however, Employee does
not release and this Paragraph 7 does not apply to any rights of Employee (i)
under this Agreement, (ii) under the Asset Purchase Agreement by and among
Company, Level 8 Technologies, Inc. and Starquest Ventures, Inc. (the "Asset
Purchase Agreement"), (iii) or Employee's affiliate, Tobacco Road LLC, with
respect to that certain promissory note issued by the Company in favor of
Tobacco Road on December 16, 2001, (iv) to indemnification by the Company under
the Company's Certificate of Incoporation and Bylaws or applicable law, (v)
against any Additional Releasee if such Additional Releasee was not entitled to
indemnification from the Company, or (vi) to receive benefits under COBRA.
b. As a material inducement to the Company and Employee to enter into
this Agreement, the Company hereby irrevocably and unconditionally releases,
acquits, forever discharges and covenants not to xxx Employee and his heirs,
administrators, executors, personal representatives, attorneys, beneficiaries,
or assigns (collectively the "Employee Releasees") from any and all charges,
complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorneys' fees and costs actually
incurred) of any nature whatsoever, known or unknown, suspected or unsuspected,
from the date of Employee's initial employment with the Company through the
Effective Date of this Agreement, including, but not limited to, rights arising
out of alleged violations or breaches of any contracts, express or implied, or
any tort or any federal, state or other governmental statute, regulation, or
ordinance, including, without limitation: (1) negligence; (2) intentional or
negligent infliction of emotional distress or outrage; (3) defamation; (4)
invasion of privacy; or (5) violation of any other legal or contractual duty
arising under the laws of the State of North Carolina, the laws of the State of
California, the laws of any other state(s), or the laws of the United States,
which the Company now has, owns or holds, or claims to have, own or hold, or
which the Company at any time heretofore had, owned or held, or claimed to have,
at any time up to and including the Effective Date of this Agreement;
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provided, however, Company does not release and this Paragraph 7 does not apply
to any rights of Company under (i) this Agreement or (ii) the Asset Purchase
Agreement.
The Company will indemnify and hold harmless the Employee for, and will
pay and reimburse the Employee the amount of, any loss, liability, claim,
damage, expense (including costs of investigation and defense and reasonable
attorneys' expenses and fees) or diminution of value, whether or not involving a
third-party claim, arising, directly or indirectly, from or in connection with
Employee's continued service as an officer or director of any foreign subsidiary
of the Company. Any request for indemnification under this Agreement shall
follow the procedure set forth in Section 7.5 of the Asset Purchase Agreement.
8. OLDER WORKERS BENEFIT PROTECTION ACT
Employee represents that he has read all the terms of this Agreement
and has had an opportunity to discuss it with individuals of his own choice who
are not associated with the Company. Employee understands that, to the extent
described in Paragraph 7 above, this Agreement releases forever the Company, its
parent, subsidiaries and affiliated corporations and each of their respective
stockholders, officers, directors, employees, agents, heirs, legal
representatives, predecessors, successors, assigns and transferees from any
legal action arising from Employee's employment with and the termination of his
employment by the Company. Employee signs this Agreement of his own free will in
exchange for the consideration to be given to Employee pursuant to Paragraph 4
of this Agreement and the Company's release pursuant to Paragraph 7 of this
Agreement, which Employee acknowledges is adequate and satisfactory. Employee
agrees that neither the Company nor its agents, representatives, or employees
have made any representations to Employee concerning the terms or effect of this
Agreement, other than those contained in this Agreement.
Employee hereby acknowledges and agrees that this Agreement and the
termination of his Employment and all actions taken in connection therewith are
in compliance with the Age Discrimination in Employment Act and the Older
Workers Benefit Protection Act and that the releases set forth in Paragraph 7
hereof shall be applicable, without limitation, to any claims brought under
these Acts. Employee further acknowledges and agrees that:
a. The release given by Employee in this Agreement is given solely in
exchange for the consideration set forth in Paragraph 4 of this Agreement and
the Company's release set forth in Paragraph 7 of this Agreement and such
consideration is in addition to anything of value which Employee received prior
to entering into this Agreement;
b. By entering into this Agreement, Employee does not waive rights or
claims that may arise after the date this Agreement is executed;
c. Employee has been advised to consult an attorney prior to entering
into this Agreement, and this provision of this Agreement satisfies the
requirement of the Older Workers Benefit Protection Act that he be so advised in
writing;
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d. Employee has been offered twenty-one (21) days from the date he
received this Agreement within which to consider this Agreement; and
e. For a period of seven (7) days following execution of this
Agreement, Employee may revoke this Agreement and this Agreement shall not
become effective or enforceable until such seven (7) day period has expired.
However, Employee's entitlement to the payments specified in Paragraph 4 and the
Company's release in Paragraph 7 shall not become binding against the Company
until after the seven (7) day period has expired.
9. NO OTHER REPRESENTATIONS
a. Employee acknowledges that in executing this Agreement, he does not
rely and has not relied upon any representation or statement not set forth
herein made by any of the Company Releasees or by any of the Company Releasees'
agents, representatives, or attorneys with regard to the subject matter, basis
or effect of this Agreement or otherwise.
b. The Company acknowledges that in executing this Agreement, it does
not rely and has not relied upon any representation or statement not set forth
herein made by any of the Employee Releasees or by any of the Employee
Releasees' agents, representatives, or attorneys with regard to the subject
matter, basis or effect of this Agreement or otherwise.
10. SOLE AND ENTIRE AGREEMENT
This Agreement, the Asset Purchase Agreement and the Employment
Agreement (with respect to the sections thereof referenced herein) including all
exhibits hereto, sets forth the entire agreement between the parties, and fully
supersedes any and all prior agreements or understandings between them,
pertaining to the subject matter hereof.
11. GOVERNING LAW; DISPUTE RESOLUTION
This Agreement shall be governed by and construed in accordance with
the laws of the State of California. In the event of a dispute that cannot be
resolved amicably between the parties, the dispute shall be resolved through
binding arbitration, conducted in Berkeley, California by a sole arbitrator in
accordance with the rules of the American Arbitration Association. The sole
arbitrator shall be appointed by agreement of the parties. In the event the
parties fail to agree upon the appointment of the sole arbitrator within thirty
(30) days after a notice of arbitration is given by either party to the other,
then the arbitrator shall be selected and appointed by the American Arbitration
Association. The arbitration award and/or determination shall be final and
binding and judgment may be entered thereon in any court of competent
jurisdiction. The prevailing party in arbitration shall be entitled to
reasonable attorney's fees.
12. NO MITIGATION, REDUCTION, OR OFFSET
Employee shall not be required to mitigate the amount of any severance
payment provided for in this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this Agreement be
reduced by any compensation or income received.
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13. SEVERABILITY
The provisions of this Agreement are severable, and if any part of it
is found to be unenforceable, the other paragraphs shall remain fully valid and
enforceable. It is the intent of the parties that this Agreement be enforced to
the maximum extent permitted by law.
14. HEADINGS AND CAPTIONS
The headings and captions used in this Agreement are for convenience of
reference only, and shall in no way define, limit, expand or otherwise affect
the meaning or construction of any provision of this Agreement.
15. MODIFICATION
No provision of this Agreement may be changed, altered, modified or
waived except in writing signed by Employee and an officer of the Company, which
writing shall specifically reference this Agreement and the provision which the
parties intend to waive or modify.
16. AUTHORITY TO BIND THE COMPANY
The Company represents and warrants that the person signing this
Agreement on its behalf has the power and authority to bind the Company hereto.
17. FULL AND CAREFUL CONSIDERATION
The parties represent and agree that they have read and fully
understand the contents and effect of this Agreement. Employee may take up to
twenty-one (21) days to decide whether he wants to accept and sign this
Agreement. Also, if Employee signs this Agreement, he will then have an
additional seven (7) days in which to revoke his acceptance of this Agreement.
This Agreement will not be effective or enforceable, nor will any consideration
be paid, until after the seven (7) day revocation period has expired. The
parties are free, and encouraged, to discuss the contents and advisability of
signing this Agreement with an attorney.
[REMAINDER OF PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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PLEASE READ CAREFULLY, THIS AGREEMENT INCLUDES A MUTUAL LIMITED RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.
Executed as of this 7th day of June 2002.
___________________________
Xxxx Xxxxxx
Executed as of this 7th day of June 2002.
___________________________
for LEVEL 8 SYSTEMS
Xxxx X. Xxxxxxxxx,
Chief Financial Officer,
Treasurer and Corporate Secretary
Effective Date of Agreement: June 14, 2002.
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