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EXHIBIT 10.01
[CONFIDENTIAL TREATMENT REQUESTED]
SEPARATION, CONSULTING AND RELEASE AGREEMENT
This Agreement ("AGREEMENT") is entered into as of July 23, 1997,
between Worldtalk Communications Corporation, a Delaware corporation doing
business as Worldtalk Corporation ("WORLDTALK"), and Xxxx X. Xxxx ("XX. XXXX")
(jointly referred to as the "PARTIES").
WHEREAS, Xx. Xxxx has been employed by Worldtalk as its President and
Chief Executive Officer and is a Director serving on the Board of Directors of
Worldtalk; and
WHEREAS, Xx. Xxxx and Worldtalk desire to discontinue the employment and
other relationships between them and to enter into a mutual general release and
a consulting arrangement on the terms and subject to the conditions described in
this Agreement;
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein, the Parties agree as follows.
1. SEVERANCE OF EMPLOYMENT. Xx. Xxxx has submitted his resignation as
Chief Executive Officer and a Director of Worldtalk, and from all other offices
he holds, and Worldtalk has accepted such resignation, effective Wednesday, July
23, 1997. Xx. Xxxx has informed Worldtalk that he also has terminated his
employment effective October 31, 1997 (the "SEPARATION DATE"). The Parties agree
that Xx. Xxxx'x resignation terminates, effective as of the date of this
Agreement, that certain Employment Agreement, dated January 23, 1997, between
the Parties. The Employment Agreement is hereby replaced by the following terms.
1.1 Continued Employment. During the period prior to the Separation
Date, Xx. Xxxx will make himself available to Worldtalk, at its request, to
perform duties relating to special projects, including but not limited to,
making himself available to assist Worldtalk and its successor Chief Executive
Officer in their transition, as well as making himself available to assist
Worldtalk in connection with the defense of the currently pending lawsuit by and
against Worldtalk (the "XXXXXXX LITIGATION"). Such services will be provided for
no greater than 10 hours per week at such times and places as shall be mutually
convenient to the Parties. During such period, Xx. Xxxx will have no right to
enter into contracts on behalf of, or otherwise bind, Worldtalk and will make no
representation to the contrary to any person or entity.
1.2 Continued Compensation. During the time prior to the Separation
Date (the "SEPARATION PERIOD") and as consideration for entering into this
Agreement, Xx. Xxxx will be paid his current base monthly salary, prorated for
any partial month, to be paid (less any applicable payroll deductions and
withholdings) in accordance with Worldtalk's normal payroll policies in effect
from time to time and will receive full employee benefits including, without
limitation, health insurance.
1.3 Employee Benefits. Worldtalk will provide Xx. Xxxx and any
dependents covered by Worldtalk's health insurance plan, continuation coverage
as provided by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), at its expense for two calendar months after the Separation
Date, provided that Xx. Xxxx timely completes and submits the requisite forms to
Worldtalk in order to obtain such continuation coverage. After
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such time, Xx. Xxxx will be responsible for the payment of any COBRA
continuation coverage. Xx. Xxxx'x participation in any employee benefit plans
that are sponsored by Worldtalk, other than the health plan, including, but not
limited to, the 401(k) plan, life and accidental death or dismemberment
insurance benefits, will cease as of the Separation Date.
1.4 Acknowledgment of Payment of Wages. On the Separation Date,
Worldtalk will deliver to Xx. Xxxx a final paycheck for all accrued wages,
salary, bonuses, reimbursable expenses and accrued but unused vacation pay due
and owing to him from Worldtalk as of the Separation Date.
1.5 Return of Company Property. Xx. Xxxx hereby represents and
warrants to Worldtalk that, at the date of this Agreement, he has returned to
Worldtalk any and all of Worldtalk's property or data of any type whatsoever
that was in his possession or control, other than those items of nominal value
that Xx. Xxxx will retain in accordance with discussions he has held with
Worldtalk's Chief Financial Officer.
2. CONSULTING AFTER SEPARATION DATE.
2.1 Duties. For a period of nine months after the Separation Date
through and including July 31, 1998 (the "CONSULTING PERIOD"), Xx. Xxxx will
continue to make himself available as a consultant to Worldtalk in charge of
special projects, as well as continue to make himself available to assist
Worldtalk in connection with the defense of the Xxxxxxx Litigation. Xx. Xxxx'x
consulting services will be performed during the Consulting Period for no
greater than 10 hours in any one week at such times and places as shall be
mutually convenient to the Parties. Such services are to be performed in a
manner that will not interfere with Xx. Xxxx'x then current employment.
2.2 Consulting Payments. As consideration for entering into this
Agreement and in return for Xx. Xxxx'x consulting services, Worldtalk agrees to
pay Xx. Xxxx [ ** ] per hour for every hour that Worldtalk requests his services
during the Consulting Period and Xx. Xxxx performs services during such period,
with fractions of an hour compensated proportionately. Accrued but unpaid
consulting fees will be paid within 30 days after Worldtalk's receipt of Xx.
Xxxx'x invoice for services rendered, detailing hours spent and tasks completed.
Each invoice will be sent to Worldtalk, Attn: Chief Financial Officer, at
Worldtalk's principal offices.
2.3 Termination of Consulting Period. Xx. Xxxx may terminate the
Consulting Period prior to the end of its term at any time upon delivering
written notice of termination to the Chief Financial Officer of Worldtalk at
Worldtalk's principal offices. Worldtalk may likewise terminate the Consulting
Period but only after a material breach of this Agreement or of the
Confidentiality Agreement by Xx. Xxxx that is not cured by Xx. Xxxx, if it is
possible of cure, within 30 days after Worldtalk's written notice of breach is
delivered to Xx. Xxxx at his last known address. All notices will be delivered
personally, by messenger or by certified mail, return receipt requested, postage
and fees prepaid.
2.4 Tax Liability. During the Consulting Period, Xx. Xxxx will be an
independent contractor. Accordingly, Xx. Xxxx agrees to indemnify and hold
Worldtalk harmless
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[**Confidential treatment has been requested with respect to certain portions of
this Exhibit. Confidential portions have been omitted from the public filing and
have been filed separately with the Securities and Exchange Commission. ]
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from any and all tax obligations for withholding and payroll taxes payable as a
consequence of the payment of the consulting fees described above.
3. STOCK AND OPTIONS.
3.1 Stock Owned by Xx. Xxxx. Prior to the effective date of
Worldtalk's initial public offering of Common Stock (the "IPO") Worldtalk
granted Xx. Xxxx options to purchase Worldtalk Common Stock during his
employment with Worldtalk pursuant to several stock option agreements (the
"STOCK OPTION AGREEMENTS"), all of which have been exercised. As of July 31,
1998 the last day of the Consulting Period, Xx. Xxxx will hold 40,816 unvested
shares of Worldtalk Common Stock that are subject to repurchase by Worldtalk at
the original exercise price pursuant to the terms of the Stock Option Agreements
upon termination of Xx. Xxxx'x relationship as a service provider as described
therein.
3.1.1 Repurchase of Shares. Worldtalk hereby exercises its right to
repurchase all of the unvested shares held by Xx. Xxxx as of July 23, 1998 for a
repurchase price of $0.20 per share ($8,163.20 in the aggregate) payable within
15 days after the date of this Agreement. Subsequent to such repurchase, stock
certificates representing all of the vested shares held by Xx. Xxxx will be
immediately released from escrow to Xx. Xxxx and the remaining 71,544 shares of
Worldtalk Common Stock will remain in escrow to vest in accordance with the
terms of the Stock Option Agreements until July 23, 1998. As such shares vest
and at Xx. Xxxx'x request, certificates representing the shares that have vested
will be released to Xx. Xxxx out of escrow. Subject to the provisions of Section
3.1.2 below, if the employment and/or consulting arrangement provided for in
this Agreement is terminated prior to July 23, 1998, Worldtalk reserves the
right to repurchase all or part of the shares that remain unvested at the date
of termination in accordance with the exercise and payment terms set forth in
the most recent Stock Option Agreement
3.1.2 No Repurchase on Acquisition. In the event of an Acquisition
(defined below) and so long as Xx. Xxxx'x employment or consulting arrangement
described above in this Agreement has not terminated, Worldtalk agrees not to
exercise its right of repurchase at any time following the Acquisition with
respect to any of the 71,544 shares that remain unvested as of the closing of
the Acquisition. The stock certificates representing such shares will be
released to Xx. Xxxx no later than the time the consideration to be received by
the stockholders of Worldtalk in connection with the Acquisition is released to
the stockholders. For purposes of this Section 3.1.2, an "ACQUISITION" means (a)
a merger or consolidation of Worldtalk in which Worldtalk is not the surviving
corporation (other than a merger or consolidation with a wholly owned subsidiary
or other transaction in which there is no substantial change in the stockholders
of Worldtalk or their relative holdings), (b) a merger in which Worldtalk is the
surviving corporation but after which the stockholders of Worldtalk cease to own
at least 50% of the issued and outstanding capital stock of Worldtalk or (c) the
sale, in one transaction or series of related transactions, of more than 50% of
the capital stock of Worldtalk, other than trades to unrelated purchasers on the
open market, or (d) the sale of all or substantially all of the assets of
Worldtalk.
3.2 Stock Option. Effective as of the effective date of the IPO,
Worldtalk granted Xx. Xxxx an option under Worldtalk's Equity Incentive Plan for
the purchase of up to
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30,000 shares of Worldtalk Common Stock at an exercise price of $8.00 per share
(the "Option"). During the Consulting Period, Xx. Xxxx will be performing
substantial services for Worldtalk and such option will continue to vest in
accordance with its terms. Xx. Xxxx acknowledges that if he does not exercise
such option as to all of the vested shares within the period ending three months
after the termination of Xx. Xxxx'x services as a consultant, then the option
will expire as to the shares not purchased in accordance with the option's
terms.
4. CONTINUING OBLIGATIONS.
4.1 Continuing Obligations re Proprietary Information. Xx. Xxxx
hereby acknowledges that he is bound by the Proprietary Rights and
Confidentiality Agreement dated March 25, 1992 (the "CONFIDENTIALITY AGREEMENT")
between the Parties. Xx. Xxxx acknowledges and agrees that he will continue to
be bound by the Confidentiality Agreement in accordance with its terms during
the Consulting Period and thereafter. Xx. Xxxx further confirms that he has
delivered to Worldtalk all documents and data of any nature containing or
pertaining to such Confidential Information (as defined in such agreement) and
that he has not taken with him any such documents or data or any reproduction
thereof. Any breach of the Confidentiality Agreement shall be deemed a material
breach of this Agreement.
4.2 Restrictions on Employment. Xx. Xxxx acknowledges that his
position with Worldtalk has placed him in a position of trust and confidence
regarding the proprietary information of Worldtalk and that during the years of
his employment and as the principal founder of Worldtalk, Xx. Xxxx has been
integrally involved in the development of Worldtalk's products and marketplace.
Accordingly, Xx. Xxxx agrees that, until July 23, 1998 and in order to guard
against the inadvertent disclosure of Worldtalk's proprietary information, he
will not serve, directly or indirectly, as an employee, consultant, independent
contractor or other service provider for, or to, the principal competitors of
Worldtalk. Such competitors consist of Control Data Systems, ISOCOR and the
SoftSwitch division only of International Business Machines.
4.3 Continued Cooperation re Litigation. Xx. Xxxx will continue to
cooperate with Worldtalk in every reasonable way and at Worldtalk's expense and
request, to testify and to make himself available for depositions, trials,
hearings and other proceedings held, or to be held, in connection with the
Xxxxxxx Litigation, at all times before, during and after the Consulting Period.
Xx. Xxxx acknowledges that this cooperation will include, but not be limited to,
reasonable travel to and from New York, if required by Worldtalk. Xx. Xxxx will
be compensated for his time in connection with services requested by Worldtalk
at [ ** ] per hour, payable as described in Section 2.2. Such services are to be
performed in a manner that will not interfere with Xx. Xxxx'x then current
employment. Worldtalk agrees to use reasonable efforts to minimize the time to
be spent by Xx. Xxxx on the Xxxxxxx Litigation and, in each case, will attempt
to identify alternatives that lessen reliance on Xx. Xxxx'x services.
5. GENERAL RELEASE.
5.1 Scope of Release. Worldtalk on the one hand, and Xx. Xxxx on the
other hand, on behalf of themselves, and their respective representatives,
heirs, executors, administrators, attorneys, partners, officers, directors,
agents, successors, assigns, shareholders and employ
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[**Confidential treatment has been requested with respect to certain portions of
this Exhibit. Confidential portions have been omitted from the public filing and
have been filed separately with the Securities and Exchange Commission. ]
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ees (collectively, "AFFILIATES"), hereby forever mutually release and discharge
each other, and their respective Affiliates, of and from any and all causes of
action, suits, debts, liens, agreements, liabilities, claims, demands, losses,
damages, costs or expenses, including without limitation, court costs and
attorneys' fees, which either may have against the other as of the date hereof,
whether known or unknown, suspected or unsuspected, arising from any omission,
act or fact that has occurred up to and until the date of the execution of this
Agreement, including but not limited to:
(a) any and all claims relating to or arising from Xx.
Xxxx'x employment relationship with Worldtalk, other than the right to
his vested retirement benefit under Worldtalk's 401(k) plan, his rights
under COBRA and his rights under the Indemnification Agreement;
(b) except as described in Section 3, any and all claims
relating to or arising from Xx. Xxxx'x right to purchase or the actual
purchase of Worldtalk capital stock, or of any options, warrants or
other rights to purchase Worldtalk capital stock;
(c) any and all claims from wrongful discharge of
employment, breach of contract, both express and implied, negligent or
intentional infliction of emotional distress, negligent or intentional
misrepresentation, negligent or intentional interference with contract
or prospective economic advantage, negligence and defamation; and
(d) any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination,
including, without limitation, for violations of the California Fair
Employment and Housing Act, California Government Code ss. 12900, et
seq.; the Employee Retirement Income Security Act (ERISA), 29 U.S.C. ss.
1001, et seq.; Title VII of the Civil Rights Act of 1964, 42 U.S.C. ss.
2000e, et seq.; and 42 U.S.C. ss. 1981.
Notwithstanding anything to the contrary in the preceding sentence, nothing
contained in this Section 5 shall release or terminate (a) the continuing
obligations of the parties under that certain Indemnification Agreement, dated
April 5, 1996, between Worldtalk and Xx. Xxxx (the "INDEMNIFICATION AGREEMENT"),
(b) the continuing obligations of Worldtalk and Xx. Xxxx under the
Confidentiality Agreement, (c) the consequences of any actions of Xx. Xxxx that
may constitute a misdemeanor or a felony, (d) the continuing obligations of
Worldtalk and Xx. Xxxx under the Stock Option Agreements and the Option referred
to in Section 3 above nor (e) the continuing obligations of Worldtalk and Xx.
Xxxx under this Agreement.
5.2 California Civil Code Section 1542. THIS RELEASE EXTENDS TO
CLAIMS THAT THE PARTIES DO NOT KNOW OR SUSPECT TO EXIST IN THEIR FAVOR, WHICH IF
KNOWN BY THE PARTY RELEASING THE SAME WOULD HAVE MATERIALLY AFFECTED THAT
PARTY'S DECISION TO ENTER INTO THIS RELEASE. THE PARTIES ACKNOWLEDGE THAT THEY
ARE FAMILIAR WITH SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA,
WHICH PROVIDES 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.
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THE PARTIES EXPRESSLY WAIVE AND RELINQUISH ANY RIGHT OR BENEFIT THAT THEY HAVE
OR MAY HAVE UNDER SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA, OR
ANY OTHER STATUTE OR LEGAL PRINCIPLE WITH SIMILAR EFFECT. In connection with
such waiver and relinquishment, the parties hereto acknowledge that, after
executing this Agreement, they may discover claims or facts in addition to, or
different from, those that they now know or believe to exist with respect to the
subject matter of this mutual release, but that, except as specifically provided
in this Section 5, it is their intention to settle and release all of the
claims, matters and differences known or unknown, suspected or unsuspected,
which now may exist or previously may have existed among them. The releases
given in this Section 5 shall remain in effect as full and complete mutual
releases notwithstanding the discovery or existence of any such additional or
different claim or fact.
6. UNDERSTANDING OF THIS AGREEMENT. Xx. Xxxx has been advised to consult
with an attorney prior to executing this Agreement. Xx. Xxxx represents and
agrees that he has availed himself of this right, that he has carefully read and
fully understands all of the provisions of this Agreement and that he is
voluntarily entering into this Agreement.
7. INDEMNITY. As a further material inducement to Worldtalk to enter
into this Agreement, Xx. Xxxx hereby indemnifies each of Worldtalk and its
Affiliates from and against any and all losses, costs, damages, or expenses,
including without limitation, attorneys' fees incurred by any of them, arising
out of any breach of this Agreement by Xx. Xxxx or the fact that any
representation made herein by Xx. Xxxx was false when made.
8. GENERAL PROVISIONS.
8.1 Successors and Assigns. The provisions of this Agreement
contained herein shall extend and inure to the benefit of and be binding upon,
in addition to the Parties hereto, just as if they had executed this Agreement,
the respective Affiliates of the Parties.
8.2 Representations as to Authority. Each of the Parties hereto
represents and warrants that he or it has the sole right and exclusive authority
to execute this Agreement and that such Party has not sold, assigned,
transferred, conveyed, or otherwise disposed of any claim or demand, or any
portion of or interest in any claim or demand, relating to any matter covered by
this Agreement.
8.3 Arbitration. Any dispute regarding any aspect of this Agreement
or any act which would violate any provision in this Agreement will be resolved
by an experienced employment law arbitrator licensed to practice law in
California and selected in accordance with the rules of the American Arbitration
Association, as the exclusive remedy for such dispute. Judgment on any award
rendered by the arbitrator may be entered in any court having proper
jurisdiction. Should Xx. Xxxx or Worldtalk institute any legal action or
administrative proceeding with respect to any claim waived by this Agreement or
pursue any dispute or matter covered by this Section 8.3 by any method other
than said arbitration, the responding party shall be entitled to recover from
the other party all damages, costs, expenses and attorneys' fees incurred as a
result of such action.
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8.4 Entire Agreement. This Agreement, the Confidentiality Agreement,
the Indemnification Agreement, the Stock Option Agreements and the Option
constitute the entire agreement between Xx. Xxxx and Worldtalk with respect to
the subject matter hereof and supersede all prior negotiations and agreements,
whether written or oral, relating to such subject matter. Xx. Xxxx acknowledges
that neither Worldtalk nor its agents or attorneys, have made any promise,
representation or warranty whatsoever concerning the future relationships among
the Parties or that is to survive this Agreement, whether written or oral, that
is not contained in the Agreements listed in this Section 8.4.
8.5 Modification. It is expressly agreed that this Agreement may not
be altered, amended, modified, or otherwise changed in any respect except by
another written agreement that specifically refers to this Agreement, duly
executed by authorized representatives of each of the Parties.
8.6 Severability. If any provision of this Agreement is held to be
void, voidable, unlawful or unenforceable, that part will be amended to achieve
as nearly as possible the same economic effect as the original provision, if in
so doing, neither of the Parties is deprived of the substantial benefit of its
bargain, and the remainder of this Agreement will remain in full force and
effect.
8.7 Interpretation. This Agreement is made, and will be construed,
under California law, as applied to contracts entered into in California by
California residents to be performed entirely within California. This Agreement
has been negotiated by the parties hereto, and its language shall not be
construed for or against any party due to any rule of construction, nor will the
terms of this Agreement be deemed a precedent or practice, or continuation of a
precedent or practice, respecting any officer, director or employee of
Worldtalk.
8.8 Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original, but all of which, taken together, will
constitute one and the same agreement.
PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF
ALL KNOWN AND UNKNOWN CLAIMS.
IN ACKNOWLEDGMENT OF THE FOREGOING, each of the Parties has duly
executed this Agreement on the date set forth below but effective as of July 23,
1997.
Dated: July 24, 1997 /s/ XXXX X. XXXX
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XXXX X. XXXX
WORLDTALK COMMUNICATIONS
CORPORATION
Dated: July 24, 1997 By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Executive VP and CFO
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