[First Virtual Communications Letterhead]
October 10, 2000
Xxxxxx Xxxxxxxx
00000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Dear Xxxxxx:
This letter represents the agreement (the "Agreement") reached between you and
XXX.XXX, Inc. ("XXX.XXX) regarding the conclusion of your employment with
XXX.XXX.
1. TERMINATION OF EMPLOYMENT
a. RESIGNATION: Your resignation as an officer and employee was effective
August 31, 2000 (your "Termination Date").
b. HEALTH CARE BENEFITS: Subsequent to your Termination Date, you are
eligible to continue to receive existing health care coverage pursuant
to COBRA, details of which have been provided to you by mail.
c. RESTRICTED STOCK: On your Termination Date, and excluding shares pledged
against the loan described in 1.d, below, you had 75,219 vested shares
of XXX.XXX Restricted Common Stock, with $12,208.07 principal and
interest outstanding on the promissory notes issued by you to XXX.XXX to
purchase these shares. Your unvested shares of XXX.XXX Restricted Common
Stock, totaling 4,781 shares, will be repurchased by the Company,
pursuant to the terms of the agreements under which the shares were
issued. Details of your restricted stock holdings are on attached
EXHIBIT A. Pursuant to the terms of the restricted stock agreements, you
have 90 days following your Termination Date to pay off the promissory
notes for the restricted stock, following which the stock certificates
will be issued to you.
d. EMPLOYEE LOAN: SECOND AMENDED AND RESTATED PROMISSORY NOTE DATED
APRIL 21, 2000 BETWEEN XXX.XXX, INC. AND XXXXXX XXXXXXXX As of
September 15, 2000, the due date on the note pursuant to the last
extension by the Board, the principal and interest outstanding on this
note was $399,359.82 (see attached EXHIBIT B), with interest accruing at
the rate of $67.89 per day. You have agreed to (1) pay $200,000 of the
outstanding principal and interest due on this note on the date of your
execution of this Agreement and (2) to pay in full the remaining
principal and interest balance on the earlier of (a) within three days
following the first day XXX.XXX's Common Stock trades at or above $10
per share on the Nasdaq National Market or (b) February 15, 2001. You
have pledged 50,000 shares of XXX.XXX Common Stock (Certificate No.
C-52) to secure this loan. Once payment in full has been made on the
promissory note, these shares will be released to you, otherwise XXX.XXX
will sell the shares against payment of the note on the earlier of the
dates set forth in clause (2) herein and you will be responsible for any
balance that may be owing.
E. EXISTING STOCK OPTIONS: As of your Termination Date, 207,217 shares of
Common Stock were vested under various stock option grants that were
made to you by XXX.XXX (see attached Exhibit C). You agree that the
vesting of all shares on your existing stock options ceased on your
Termination Date. We have agreed to extend the exercise period for your
vested options as described in item 4 below.
2. NEW STOCK OPTION AS A DIRECTOR
As a non-employee Director, you will receive a new stock option grant for 30,000
shares of XXX.XXX Common Stock, with a grant date of September 15, 2000. This
option will have an exercise price of $6.375 per share, the fair market value of
the stock on the date of grant, and will be subject to vesting on the same terms
and conditions as the grants received by newly elected non-employee members of
our Board of Directors.
Page 2 of 2
3. CONSULTING AGREEMENT
You have agreed to provide consulting services to XXX.XXX for the period October
13, 2000 through August 31, 2001 in the areas of technology/product planning and
strategy. Such consulting services will not exceed two days in any calendar
month and will be conducted by telephone, email or in face to face meetings at
mutually agreed upon times and locations. The total fee to be paid by XXX.XXX to
you for these consulting services will be $50,000, which will be earned monthly
but be paid to you in full on the date that the employee loan and accrued
interest referenced in item 1.d. above is repaid in full.
4. EXTENSION OF OPTION EXERCISE PERIOD
In consideration of this Agreement, the period to exercise your vested shares
referred to in item 1.e. above will be extended to March 31, 2001. This
extension may alter the status of certain grants from incentive to non-qualified
stock options. In addition, you will receive the option grant referenced in item
2 above. You understand and agree that you assume full responsibility for and
you agree to indemnify XXX.XXX against any and all tax liability you may incur
as a result of the extension of the exercise period for your vested options.
5. RELEASE
In exchange for the benefits described above, you and your successors and
assigns release and absolutely discharge XXX.XXX and its stockholders,
directors, employees, agents, attorneys, legal successors and assigns of and
from any and all claims, actions and causes of action, whether now known or
unknown, which you now have, or at any other time had, or of any matter, cause
fact, thing act or omission whatsoever occurring or existing at any time up to
and including the date hereof, including, but not limited to, any claims of
wrongful termination, breach of contract or national origin, race, age sex or
other discrimination under the Civil Rights Act of 1964 the Age Discrimination
In Employment Act of 1967, the Americans with Disabilities Act, the Fair
Employment and Housing Act or any other applicable law.
You hereby waive any right or benefit which you have or may have under section
1542 of the Civil Code of the State of California, to the full extent that you
may lawfully waive such rights and benefits, pertaining to the subject matter of
this general release of claims. You acknowledge that you have read section 1542
of the Civil Code of the State of California that is set forth below in its
entirety:
---------------------------------------------------------
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR DOES NOT KNOW OR SUSPECTS 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.
---------------------------------------------------------
6. PROPRIETARY INFORMATION AGREEMENT
You acknowledge and agree that you shall continue to be bound by, and comply
with, the terms of the Proprietary Information and Inventions Agreement dated
January 31, 1994 between XXX.XXX and you, including your agreement for a period
of one year after your Termination Date not to either directly or indirectly,
solicit the services, or attempt to solicit the services of any employee of
XXX.XXX or its affiliated entities on behalf or yourself or any other person or
entity.
7. RECOVERY OF LEGAL COSTS
The prevailing party shall be entitled to recover from the losing party its
attorneys' fees and costs incurred in any lawsuit or other action brought to
enforce any right arising out of this Agreement.
Page 2 of 3
8. ENTIRE AGREEMENT
This letter constitutes the entire agreement between the parties with respect to
the subject matter hereof, and supersedes all prior negotiations and agreements
with respect to the subject matter hereof, whether written or oral. This
Agreement may not be altered or amended except by a written document signed by
XXX.XXX and you.
9. NON-DISCLOSURE
Both XXX.XXX and you agree that neither party shall directly or indirectly
disclose any of the terms of this Agreement to anyone (other than your immediate
family or counsel), except as such disclosure may be required for accounting or
tax reporting purposes or as may be required by law. Further, the timing and
content of any public announcements of your separation from the XXX.XXX must be
mutually agreed between you and XXX.XXX.
Please execute two copies of this agreement and return one copy to me at your
earliest convenience and keep one for your records.
I want to thank you for your past contributions to XXX.XXX as an employee and
look forward to working with you as a consultant and as a member of our Board of
Directors.
Sincerely,
/s/ Xxxxx Xxxxxxxxx
--------------------------------
XXXXX XXXXXXXXX
PRESIDENT AND CHIEF EXECUTIVE OFFICER
--------------------------------------------------------------------------------
I understand that I should consult with an attorney prior to signing this
Agreement and that I am giving up any legal claims I have against XXX.XXX by
signing this Agreement. I further acknowledge that I am signing this Agreement
knowingly, willingly and voluntarily in exchange for the benefits described in
paragraph 1, above.
/s/ Xxxxxx Xxxxxxxx 10/10/00
------------------------------------ ----------
XXXXXX XXXXXXXX [DATE]
EXHIBIT A
XXX.XXX, INC.
XXXXXX XXXXXXXX
STATUS OF RESTRICTED STOCK GRANTS
AUGUST 31, 2000
RESTRICTED STOCK GRANT
Issue Date 12/6/1994 4/18/1995 1/13/1996 4/3/1996
----------- ----------- ----------- -----------
Price per share $ 0.075 $ 0.075 $ 0.150 $ 0.250
Certificate C-30 C-52 1242 0001
Total Shares 50,000 50,000 25,000 25,000
=========== =========== =========== ===========
Shares previously issued - - 10,000 10,000
Vested and available to issue 50,000 50,000 (A) 13,164 12,055
Shares to be re-purchased - - 1,836 2,945
PROMISSORY NOTE
Annual interest rate 7.74% 5.73% 7.74%
Interest per day $ 0.80 $ 0.35 $ 0.80
Initial Principal Amount $ 3,750.00 See $3,750.00 $ 6,250.00
Less amount previously repaid (B) - Promissory (1,500.00) (2,500.00)
Less principal re-purchased shares - Note dated (275.40) (736.25)
Principal outstanding $ 3,750.00 April 21, 2000 $1,974.60 $ 3,013.75
Accrued interest 1,665.96 597.29 1,280.28
----------- ----------- ----------- -----------
Total Payment Due $5,415.96 $ 2,571.89 $4,294.03 $ 12,281.88
=========== =========== =========== ===========
Days: Issue thru 8/31/00 FULLY VESTED 1,691 1,610
----------------------------
Number of days in 5 years 1,825 1,825
% Vested 100.00% 100.00% 92.66% 88.22%
(A) PLEDGED AGAINST NOTE DATED APRIL 21, 2000
(B) PARTIAL PAYMENTS MADE ON 11/15/98
MEMO - CALCULATION OF DAYS ELAPSED THROUGH 8/31/00
-----------------------------------------------------------------------------------------------------------------
6-Dec-94 % Vested
---------------------------------------------- ========
Thru 12/5/99 12/6 - 8/31/00
------------ --------------
Days elapsed since loan inception 1,825 270 2,095
============ ============== ===============
Days in Five Years 1,825 100.00%
=============== ========
Noted dated January 13, 1996
----------------------------------------------
Thru 1/12/00 1/13 - 8/31/00
------------ --------------
Days elapsed since loan inception 1,460 231 1,691
============ ============== ===============
Days in Five Years 1,825 92.66%
=============== ========
Noted dated April 4 1996
----------------------------------------------
Thru 4/3/00 4/4 - 8/31/00
------------ --------------
Days elapsed since loan inception 1,460 150 1,610
============ ============== ===============
Days in Five Years 1,825 88.22%
=============== ========
EXHIBIT B
SECOND AMENDED AND RESTATED PROMISSORY NOTE DATED APRIL 21, 2000 BETWEEN
XXX.XXX, INC. AND XXXXXX XXXXXXXX
1. Principal: $349,124.66
2. Interest: 7.0% per year; simple interest, not compounded; one year assumed
to have 360 days
3. Interest to be accrued from August 26, 1998
4. Principal and interest due and payable in full on June 30, 1999
5. Payment extended to 7/15/00 by action of the Board of Directors
6. Payment extended to 9/15/00 by action of the Board of Directors
8. Secured by 50,000 shares of XXX.XXX common stock, certificate #C-52
9. XXX.XXX may sell shares if not paid when due to cover expenses of
collection, interest and principal
September 15, 2000
------------------
Principal $ 349,124.66
Interest rate 7.00% SIMPLE INTEREST, NOT COMPOUNDED
ACCRUED INTEREST FROM 8/26/98
Through 8/25/00 $ 48,877.45 TWO YEARS AT 7.0% P.A.
8/26/00 through 9/22/00 $ 1,832.90 27 DAYS AT 7.0% P.A.
------------------
Total interest due $ 50,710.36
Total Amount Due $ 399,835.02 PRINCIPAL + INTEREST ON SEPTEMBER 15, 2000
==================
Interest per day $ 67.89 ANNUAL INTEREST DIVIDED BY 360 DAYS AS DEFINED IN NOTE
==================
