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EXHIBIT 10.38
SEPARATION AGREEMENT AND RELEASE
It is hereby agreed by and between Xxxxxx Xxxxxxxxxxx ("Officer") and
Restoration Hardware a Delaware corporation (the "Company") as follows:
1. TERMINATION OF EMPLOYMENT. Officer hereby resigns from the employ of the
Company and as a member of the Board of Directors of the Company, both effective
on the date of Officer's signing of this Agreement, after which date he will
perform no further duties, functions or services for the Company. Officer agrees
to sign, contemporaneous with this Agreement, that certain voting agreement
(granting an irrevocable proxy with respect to Officer's shares of common stock
of the Company and making certain other covenant and agreements) that he has
been asked to sign in connection with a pending third party financing of the
Company.
2. PAYMENT OF MONIES OWED. Officer acknowledges that the Company has paid all
remuneration owed to him as a result of his employment and Board of Director
service with the Company, including but not limited to his salary through the
date hereof all accrued vacation pay through that date, all commissions and/or
bonuses owed to him, and all business expenses, if any, incurred by Officer as a
result of his employment with the Company; provided that the Company agrees to
reimburse Officer, in accordance with Company policy, for any previously
unreimbursed business expenses that Officer has incurred, provided that he
submits a request for reimbursement in accordance with Company policy within 30
days hereof. In addition, Officer shall be entitled to exercise any vested stock
options (including any that vest pursuant to Paragraph 3 below) within the
post-termination of employment exercise period set forth in the documents
evidencing such options.
3. ADDITIONAL COMPENSATION. Provided that Officer has complied with his
obligation under Paragraph 1 hereof and subject to the remaining terms of this
Agreement, the Company agrees to provide Officer with the following severance
benefits, subject to any applicable tax withholding obligations:
(a) a cash severance benefit equal to $440,000 (twice Officer's Base
Salary of $220,000.00), $110,000 of which will be paid in a single lump
sum on the eighth day after Officer executes this Agreement and the
remainder of which will be paid in periodic installments in accordance
with the Company's normal payroll practice beginning 6 months after the
date hereof and ending 24 months after the date hereof; provided that
if Officer obtains other permanent employment before the end of such
period, then in lieu of any remaining payments he shall be entitled to
100% of any unpaid payments that would otherwise have been paid within
the first twelve months of the date hereof and 50% of the remaining
unpaid payments;
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(b) payment of Officer's COBRA premiums for continued medical benefit
coverage for himself and his eligible dependents until the later of the
date that Officer becomes entitled to medical benefits from another
employer or one year after the date hereof;
(c) accelerated vesting of Officer's previously unvested outstanding
employee stock options;
(d) reimbursement for the expenses of outplacement services with a
provider approved by the Company, not to exceed $25,000(which
outplacement services shall be arranged by the Company directly, if
Officer so requests, and shall include office space);
(e) extension of the term of the note made by Officer in favor of the
Company in the principal amount of $150,000 on October 25,2000, (the
"Note") so that it is due in monthly installments of $25,000 per month
beginning on its original due date of June 29, 2001 until repaid in
full.
provided that if the balance of the $150,000 loan that Officer owes the Company
is not timely repaid when due, then any remaining unpaid amounts under Paragraph
3(a) and (b) will be suspended until such time as such loan is paid in full.
4. ACKNOWLEDGMENT OF FULL PAYMENT. Officer acknowledges that the payments and
arrangements described in paragraphs 2 through 3 above shall constitute full and
complete satisfaction of any and all amounts properly due and owing to Officer
as a result of his employment with the Company and/or the termination of that
employment, and that in the absence of this Agreement, Officer would not be
entitled to, among other things, the payments and arrangements specified in
paragraph 3 above.
5 NON-DISCLOSURE OF TRADE SECRETS. In consideration for the foregoing, Officer
acknowledges and agrees:
(a) That he has not revealed and subsequent to the execution of this
Agreement he will not at any time reveal, either directly or
indirectly, to any person, company, business, firm or corporation, nor
use for his own purposes, any trade secret, proprietary information or
any confidential information about the Company, its service, its
customers, or its methods of doing business ("Confidential
Information") ; provided that the restrictions contained in to this
Section 5(a) shall not apply to any Confidential Information that (a)
is a matter of public knowledge, (b) is independently developed by a
person not a party to this Agreement without the use, directly or
indirectly, of Confidential Information, (c) is obtained from a third
party who is not an employee of the Company and is not otherwise
subject to any non-disclosure obligation to the Company, (d) is of a
nature that could be learned in a lawful manner while
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working for a competitor, or (e) is required to be disclosed by law or
the order of any court of government agency, or in any litigation or
similar proceeding; provided that prior to making any such required
disclosure, officer shall notify the Company in sufficient time to
permit the Company to seek an appropriate protective order;
(b) For the purposes of this paragraph, it is understood that the term
the "Company" includes all operations and profit centers of the Company
and/or its respective parents, subsidiaries and affiliates.
6. RELEASE. In further consideration for the foregoing, Officer and the Company
hereby release and discharge each other and their respective parents,
subsidiaries and affiliates, and each of its and their respective directors,
officers, agents, servants, employees, heirs and assigns, past and present, and
each of them (collectively referred to as "Releasees") and covenant not to xxx
or otherwise institute or cause to be instituted, or maintain any legal or
administrative proceedings against one another or their respective Released
Parties from any and all claims, demands, agreements, contracts, covenants,
actions, suits, causes of action, obligations, debts, expenses, damages,
judgments, orders and liabilities of whatever kind or nature in law, equity or
otherwise, whether now known or unknown, which either now owns or holds or has
at any time heretofore owned or held as against their respective Releasees; and
without limiting the generality of the foregoing, releases and discharges any
and all claims, demands, agreements, obligations and causes of action, known or
unknown by either, arising out of or in any way connected with any transactions,
occurrences, acts or omissions occurring prior to the date hereof regarding
Officer's employment relationship with the Company and/or the termination of
that employment. This release pertains to, but is not limited to, claims arising
under federal, state or local laws prohibiting employment discrimination
(including but not limited to claims under the Age Discrimination in Employment
Act, Title VII of the Civil Rights Act of 1964, and/or the California Fair
Employment and Housing Act) and/or claims arising out of any legal restrictions
upon the Company's right to terminate Officer's employment.
7. WAIVER. Section 1542 of the Civil Code of the State of California provides,
generally, that a release does not extend to unknown claims. Specifically,
Section 1542 of the Civil Code of the State of California states 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.
For the purposes of implementing a full and complete release and discharge of
Releasees, Officer and the Company expressly waive and relinquish all rights and
benefits afforded by Section 1542 of the Civil Code of the State of California
and
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acknowledge that this Agreement is intended to include and discharge all claims,
whether or not known or suspect to exist by either party at the time of
execution of this Agreement.
Notwithstanding paragraphs 6 and 7 above, the Company agrees to indemnify and
defend Officer from any claim, demand, action or cause of action asserted
against Officer arising within the scope of Officer's employment with Company to
the extent required by the bylaws of the Company, California Labor Code 2802,
and/or California Corporations Code 317.
8. NO FILINGS. Officer and the Company agree that they will not initiate any
suit or action before any federal, state or local judicial or administrative
forum with respect to any matter arising out of or connected with Officer's
employment with the Company and/or the termination of that employment; and that,
without subpoena. Officer agrees that he will at the Company's request, testify
in any judicial or administrative proceedings to which the Company is a party
with respect to any matter involving the affairs of the Company of which he has
knowledge; provided that Officer shall be entitled to reimbursement for this
reasonable expenses incurred in such a process and shall be entitled to
reasonable compensated for any time that the Company requests that Officer
expend in excess of the time actually spent testifying in any such proceeding.
9. CONFIDENTIALITY. Officer represents and agrees that he will keep the terms,
amount and fact of this Agreement confidential, and that he will not disclose
any information concerning this Agreement to any third person, including, but
not limited to, any past or present employee of the Company, except (i) as may
be required by law or (ii) to family members or those with whom he conducts
personal business (including Officer's attorneys and financial advisors),
provide such persons are informed of and agree to be bound by this
confidentiality clause.
10. NON-DISPARAGEMENT. Officer and the Company further agree not to disparage,
besmirch or defame one another, or their respective Releasees. Upon execution of
this Agreement by Officer and the lapse of the revocation period referred to in
Section 19 below, the Company shall, upon Officer's request, execute a letter of
recommendation mutually agreeable to both parties.
11. NON-ADMISSION OF LIABILITY. Officer acknowledges that the Company denies any
wrongdoing whatsoever in connection with Officer's employment and termination.
It is expressly understood and agreed that nothing contained in or referred to
in this Agreement shall constitute or be treated as an admission of any
wrongdoing or liability on the part of Company.
12. ATTORNEYS FEES AND COSTS. If there is any administrative or judicial
proceeding to resolve any dispute regarding the validity, enforcement or alleged
breach of this Agreement, the prevailing party in such proceeding shall be
entitled to
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reimbursement of such party's attorney's fees and costs incurred with respect to
such proceeding.
13. NO REPRESENTATION. Officer represents and acknowledges that in executing
this Agreement he does not rely and has not relied on any representation or
statement by any of the Releasees or by any of the Releasees' agents,
representatives or attorneys with regard to the subject matter, basis or effect
of this Agreement.
14. BINDING AGREEMENT. This Agreement shall be binding upon Officer and the
Company and their heirs, administrators, representatives, executors, successors
and assigns, and shall inure to the benefit of Releasees and each of them, and
to their heirs, administrators, representatives, executors, successors, and
assigns.
15. GOVERNING LAW. This Agreement is made and entered into in the State of
California, and shall in all respects be interpreted, enforced and governed
under the laws of the State of California. The language of all parts of this
Agreement shall in all cases be construed as whole, according to its fair
meaning, and not strictly for or against any of the parties.
16. SEPARABILITY. Should any provision of this Agreement be declared or be
determined by any court to be illegal or invalid, the validity of the remaining
parts, terms, or provisions shall not be affected, and said illegal or invalid
part, term, or provision shall be deemed not to be part of this Agreement.
17. CONSIDERATION PERIOD. Officer acknowledges that he has been advised by the
Company that he is entitled to a period of at least twenty-one days within which
to consider this Agreement before signing it, if he wishes. Officer expressly
acknowledges that he has taken sufficient time to consider this Agreement before
signing it.
18. INDIVIDUAL AGREEMENT. This Agreement has been individually negotiated and is
not part of a group exit incentive or other termination program.
19. REVOCATION PERIOD. This Agreement will not become effective or binding on
the parties until seven (7) days after it is signed, during which time Officer
may revoke this Agreement if he wishes to do so, except that, in any event,
Officer shall not remain in the employ of the Company or as a member of the
Board of Directors of the Company after Officer signs this Agreement. Any
revocation must be in writing and directed to the Xxxxxxx Xxxxxx.
20. VOLUNTARY AGREEMENT. Officer acknowledges that is fully aware of his right
to discuss any and all aspects of this matter with an attorney of his choice,
that the Company has advised him of that right, that he has carefully read and
fully understands all of the provisions of this Agreement, that he has, in fact,
discussed all
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aspects of this matter with an attorney of his choice and that he is voluntarily
entering into this Agreement.
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21. ENTIRE AGREEMENT. This agreement sets forth the entire agreement between the
parties, and fully supersedes any and all prior agreements or understandings
between the parties pertaining to the subject matter of the Agreement.
PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.
/s/ XXXXXX XXXXXXXXXXX
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Xxxxxx Xxxxxxxxxxx
Executed at Corte Madera, California, this twentieth day of March 2001.
Restoration Hardware
/s/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
Chief Executive Officer and Chairman
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