SEPARATION AGREEMENT AND RELEASE
EXHIBIT 10.40
SEPARATION AGREEMENT AND RELEASE
This Separation Agreement and Release (this “Agreement”) is made by and between Genesis
Microchip Inc. (including any company or organization that Genesis Microchip Inc. has acquired in
the past and any subsidiary or affiliate of Genesis Microchip Inc.) (the “Company”), and Xxxxxxx
Xxxxxx (“Executive”) (collectively referred to as the “Parties”):
WHEREAS, Executive is employed by the Company as the Vice President of Human Resources;
WHEREAS, the Company and Executive have entered into the Confidentiality and Property Rights
Agreements dated August 29, 2000 (the “Confidentiality Agreement”);
WHEREAS, the Parties have mutually determined that a termination of the employment
relationship would be in the best interest of the Company, and therefore Executive will resign from
his employment with the Company effective July 1, 2006 (the “Termination Date”);
WHEREAS, as of the Termination Date, Executive has been granted options to purchase an
aggregate amount of 233,500 shares of the Company’s common stock pursuant to the Company’s 1997
Employee Stock Option Plan, the 2000 Nonstatutory Stock Plan, the 2001 Nonstatutory Stock Option
Plan (collectively, the “Company Stock Plans”), and the related stock option agreements
(collectively, the “Stock Option Agreements”);
WHEREAS, the Parties, and each of them, wish to resolve any and all disputes, claims,
complaints, grievances, charges, actions, petitions and demands that the Executive may have against
the Company as defined herein, including, but not limited to, any and all claims arising or in any
way related to Executive’s employment with, or separation from, the Company;
NOW THEREFORE, in consideration of the premises and the agreements made herein, the Parties
hereby agree as follows:
COVENANTS
1. Resignation. Executive hereby resigns from his position as the Company’s Vice
President of Human Resources and any or all other employment positions that may have at any time
been held by Executive with the Company or any of its affiliates, effective the Termination Date.
2. Consideration.
(a) Cash Lump Sum Payment. The Company agrees to pay Executive a cash lump sum
payment of Ninety-Four Thousand Three Hundred Fifty Dollars (US$94,350), less applicable
withholdings, which amount is equal to twenty-six weeks of his base salary (the “Severance
Payment”). The Severance Payment shall be paid to Executive on the Termination Date.
(b) Bonus. The Company agrees to pay Executive a bonus in the amount of Sixty
Thousand Three Hundred Eighty-Four Dollars (US$60,384), less applicable withholdings, which
amount represents a bonus under the Company’s FY 2006 Executive Bonus Plan (the “Bonus”). The
Bonus shall be paid to Executive on the Termination Date.
(c) COBRA. The Company shall reimburse Executive for the payments he makes for COBRA
coverage for a period of twelve (12) months after the Termination Date, or until Executive has
secured other employment with comparable coverage, whichever occurs first, provided Executive
timely elects and pays for COBRA coverage. COBRA reimbursements shall be made by the Company to
Executive within fifteen (15) days of Executive’s provision to the Company of documentation
substantiating his payments for COBRA coverage.
3. Stock Options. The Parties agree that for purposes of determining the number of
shares of the Company’s common stock that Employee is entitled to purchase from the Company
pursuant to the exercise of outstanding options, the Employee will be considered to have vested
only up to the Termination Date. Employee acknowledges that as of the Termination Date, he will
have vested in 8,969 options and no more. The exercise of any stock options shall continue to be
subject to the terms and conditions of the Stock Option Agreement(s) and the applicable Company
Stock Plan(s). Executive’s period to exercise his stock options, to the extent vested, shall be
extended to December 31, 2006.
4. Benefits. Executive’s health insurance benefits with the Company will cease on the
Termination Date, subject to the benefits described in paragraph 2(c), and subject to Executive’s
right to continue his health insurance coverage under COBRA after expiration of the benefits
described in paragraph 2(c). All other benefits and incidents of employment, including, but not
limited to paid time off, ceased on the Termination Date. The Executive shall receive payment for
his accrued and unused Paid Time Off (“PTO”) balance on the Termination Date.
5. Trade Secrets and Confidential Information/Company Property. Executive reaffirms
and agrees to observe and abide by the terms of the Confidentiality Agreement, specifically
including the provisions therein regarding nondisclosure of the Company’s trade secrets and
confidential and proprietary information, and non-solicitation of Company employees. Executive’s
signature below constitutes his certification under penalty of perjury that he has returned all
documents and other items provided to Executive by the Company, developed or obtained by Executive
as a result of his employment, or otherwise belonging to the Company, except as otherwise provided
herein. The Company agrees to provide the Executive at no cost his current Dell Notebook Computer
after the Company has reviewed and removed all Company information from the computer.
6. Payment of Compensation. Executive acknowledges and represents that the Company
has paid all salary, wages, bonuses, accrued vacation, housing allowances, tax services, relocation
expenses, medical costs, immigration expenses, vehicle allowance, general expenses, legal fee
reimbursement, interest, severance, outplacement costs, fees, stock, stock options, vesting,
commissions and any and all other benefits and compensation due to Executive, once the Severance
Payment, Bonus, PTO and COBRA benefits set forth herein are provided. Executive has ten (10)
business days from the Termination Date to file any remaining expense reports and the Company shall
have ten (10) business days from the date of receipt of such expense reports to make any
appropriate reimbursements to Executive, pursuant to the Company’s regular policies and practices
related to expense reimbursement.
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7. Trading in Company Stock. Executive acknowledges his continued obligation to abide
by the Company’s Xxxxxxx Xxxxxxx Policy.
8. Release of Claims. Executive agrees that the foregoing consideration represents
settlement in full of all outstanding obligations owed to Executive by the Company and its current
and former officers, directors, employees, agents, investors, attorneys, advisors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations and
assigns (the “Releasees”), from, and agrees not to xxx concerning, or in any manner to institute,
prosecute or pursue, any claim, complaint, charge, duty, obligation or cause of action relating to
any matters of any kind, whether presently known or unknown, suspected or unsuspected, that
Executive may possess against any of the Releasees arising from any omissions, acts or facts that
have occurred up until and including the date Executive signs this Agreement including, without
limitation:
(a) any and all claims relating to or arising out of Executive’s employment relationship with
the Company and the termination of that relationship;
(b) any and all claims relating to, or arising from, Executive’s right to purchase, or actual
purchase of shares of stock of the Company, including, without limitation, any claims for fraud;
misrepresentation; breach of fiduciary duty; breach of duty under applicable state corporate law;
and securities fraud under any state or federal law;
(c) any and all claims under the law of any jurisdiction including, but not limited to,
wrongful discharge of employment; termination in violation of public policy; discrimination;
harassment; retaliation; breach of contract, both express and implied; breach of a covenant of good
faith and fair dealing, fraud and fraudulent inducement, both express and implied; promissory
estoppel; negligent or intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence; personal injury;
assault; battery; invasion of privacy; false imprisonment; conversion; workers’ compensation; and
disability benefits;
(d) any and all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Americans with Disabilities Act of 1990; the Fair Labor Standards Act; the Fair Credit Reporting
Act; the Age Discrimination in Employment Act of 1967; the Employee Retirement Income Security Act
of 1974; the Worker Adjustment and Restraining Notification Act; the Family and Medical Leave Act;
the California Family Rights Act; the California Fair Employment and Housing Act, and the
California Labor Code, including, but not limited to Labor Code Sections 1400-1408;
(e) any and all claims for violation of the federal, or any state, constitution;
(f) any and all claims arising out of any other laws and regulations relating to
employment or employment discrimination;
(g) any and all claims for attorneys’ fees and costs; and
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(h) any claim for any loss, cost, damage, or expense arising out of any dispute over
the non-withholding or other tax treatment of any of the proceeds received by Executive as
a result of this Agreement.
Executive agrees that the release set forth in this section shall be and remain in effect in
all respects as a complete general release as to the matters released. This release does not
extend to any obligations incurred under this Agreement.
9. Acknowledgment of Waiver of Claims under ADEA. Executive acknowledges that he is
waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967
(“ADEA”) and that this waiver and release is knowing and voluntary. Executive and the Company
agree that this waiver and release does not apply to any rights or claims that may arise under ADEA
after the Effective Date of this Agreement. Executive acknowledges that the consideration given
for this waiver and release Agreement is in addition to anything of value to which Executive was
already entitled. Executive further acknowledges that he has been advised by this writing that:
(a) he should consult with an attorney prior to executing this Agreement; (b) he has at
least twenty-one (21) days within which to consider this Agreement; (c) he has at least seven (7)
days following the execution of this Agreement by the parties to revoke the Agreement; (d) this
Agreement, and all of the terms and conditions hereof, shall not be effective until the revocation
period has expired; and (e) nothing in this Agreement prevents or precludes Executive from
challenging or seeking a determination in good faith of the validity of this waiver under the ADEA,
nor does it impose any condition precedent, penalties or costs from doing so, unless specifically
authorized by law.
10. Civil Code Section 1542. Executive represents that he is not aware of any claim
other than the claims that are released by this Agreement. Executive acknowledges that he has been
advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542,
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.
Executive, being aware of said code section, agrees to expressly waive any rights he may have
thereunder, as well as under any other statute or common law principles of similar effect.
11. No Pending or Future Lawsuits. Executive represents that he has no lawsuits,
claims, or actions pending in his name, or on behalf of any other person or entity, against any of
the Releasees. Executive also represents that he does not intend to bring any claims on his own
behalf or on behalf of any other person or entity against any of the Releasees.
12. Non-Disparagement. Executive agrees to refrain from any defamation, libel or
slander of the Releasees or tortious interference with the contracts and relationships of the
Releasees. All inquiries by
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potential future employers of Executive will be directed to the Company’s Vice President of
Human Resources if there shall be one, and otherwise to its President.
13. Application for Employment. Executive understands and agrees that, as a condition
of this Agreement, he shall not be entitled to any employment with the Company, and he hereby
waives any right, or alleged right, of employment or re-employment with the Company. Executive
further agrees that he will not apply for employment with the Company. Company agrees not to
contest any application for California State Unemployment Benefits made by the Executive.
14. Confidentiality. Executive agrees to maintain in complete confidence the contents
and terms of this Agreement and the consideration for this Agreement (hereinafter collectively
referred to as “Separation Information”) until such time as, and to the extent that, the Separation
Information is publicly disclosed by the Company in a filing with the SEC or otherwise. Except as
required by law, Executive may disclose Separation Information only to his immediate family
members, the Court in any proceedings to enforce the terms of this Agreement, Executive’s legal
counsel, his accountant and any professional tax advisor to the extent that they need to know the
Separation Information in order to provide advice on tax treatment or to prepare tax returns, and
shall take every reasonable precaution to prevent disclosure of any Separation Information to all
other third parties. Executive agrees that he will not publicize, directly or indirectly, any
Separation Information.
15. Cooperation in Litigation. Executive agrees that he will not knowingly counsel or
assist any attorneys or their clients in the presentation or prosecution of any disputes,
differences, grievances, claims, charges, or complaints by any third party against any of the
Releasees, unless under a subpoena or other court order to do so. Executive agrees both to
immediately notify the Company upon receipt of any such subpoena or court order, and to furnish,
within three (3) business days of its receipt, a copy of such subpoena or court order to the
Company. If approached by anyone for counsel or assistance in the presentation or prosecution of
any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees,
Executive shall state no more than that he cannot provide counsel or assistance. Executive further
agrees to make himself reasonably available to provide information and assistance to the Company in
any disputes, lawsuits, differences, grievances, claims, charges, or complaints brought against the
Company, including, but not limited to making himself available to provide testimony and serve as a
witness.
16. No Admission of Liability. Executive understands and acknowledges that this
Agreement constitutes a compromise and settlement of any and all potential disputed claims. No
action taken by the Company hereto, either previously or in connection with this Agreement, shall
be deemed or construed to be: (a) an admission of the truth or falsity of any potential claims; or
(b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Executive
or to any third party.
17. Non-Solicitation. Executive agrees that for a period of twelve (12) months
immediately following the Effective Date of this Agreement, Executive shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to
leave their employment or service relationship, or attempt to do so, either for himself or any
other person or entity.
18. Breach. Executive acknowledges and agrees that any breach of any provision of
this Agreement, except as permitted by paragraph 9(e), shall constitute a material breach of this
Agreement and shall entitle
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the Company immediately to recover and/or cease the severance benefits provided to Executive
under this Agreement.
19. Arbitration. The Parties agree that any and all disputes arising out of the terms
of this Agreement, their interpretation, and any of the matters herein released, shall be subject
to binding arbitration in Santa Xxxxx County before the American Arbitration Association under its
National Rules for the Resolution of Employment Disputes. The Parties agree that the prevailing
party in any arbitration shall be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties agree that the prevailing party in any
arbitration shall be awarded its reasonable attorneys’ fees and costs. The Parties hereby agree to
waive their right to have any dispute between them resolved in a court of law by a judge or jury.
This paragraph will not prevent either party from seeking injunctive relief (or any other
provisional remedy) from any court having jurisdiction over the Parties and the subject matter of
their dispute relating to Executive’s obligations under this Agreement and the Confidentiality
Agreement.
20. No Knowledge of Wrongdoing. Executive represents that he has no knowledge of any
wrongdoing involving improper or false claims against a federal or state governmental agency, or
any other wrongdoing that involves any of the Releasees.
21. Authority. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all who may claim through it
to the terms and conditions of this Agreement. Executive represents and warrants that he has the
capacity to act on his own behalf and on behalf of all who might claim through him to bind them to
the terms and conditions of this Agreement. Each Party warrants and represents that there are no
liens or claims of lien or assignments in law or equity or otherwise of or against any of the
claims or causes of action released herein.
22. No Representations. Executive represents that he has consulted with an attorney,
and has carefully read and understands the scope and effect of the provisions of this Agreement.
Executive has not relied upon any representations or statements made by the Company which are not
specifically set forth in this Agreement.
23. Severability. In the event that any provision or any portion of any provision
hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said provision or portion of
provision.
24. Attorneys’ Fees. In the event that either Party brings an action to enforce or
effect its rights under this Agreement, the prevailing party shall be entitled to recover its costs
and expenses, including the costs of mediation, arbitration, litigation, court fees, plus
reasonable attorneys’ fees, incurred in connection with such an action.
25. Entire Agreement. This Agreement represents the entire agreement and
understanding between the Company and Executive concerning Executive’s employment with and
separation from the Company and the events leading thereto and associated therewith, and supersedes
and replaces any and all prior agreements, offer letters, and understandings concerning Executive’s
relationship with the Company, with the exception of the Confidentiality Agreement and the Stock
Option Agreements, as may be amended hereby.
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26. No Oral Modification. This Agreement may only be amended in writing signed by
Executive and the Company’s then chief executive officer.
27. No Waiver. The failure of the Company to insist upon the performance of any of
the terms and conditions in this Agreement, or the failure to prosecute any breach of any of the
terms and conditions of this Agreement, shall not be construed thereafter as a waiver of any such
terms or conditions. This entire Agreement shall remain in full force and effect as if no such
forbearance or failure of performance had occurred.
28. Governing Law. This Agreement shall be governed by the laws of the State of
California, without regard for choice of law provisions.
29. Effective Date. This Agreement will become effective after it has been signed by
both Parties and after seven (7) days have passed since Executive signed the Agreement (the
“Effective Date”).
30. Counterparts. This Agreement may be executed in counterparts and by facsimile,
and each counterpart and facsimile shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the undersigned.
31. Survival of the Agreement. This Agreement shall not be terminated by any
dissolution of the Company resulting from either a merger or consolidation, in which the Company is
not the surviving or consolidated corporation, or a transfer of all or substantially all of the
assets of the Company. If either event described in this Paragraph 30 occurs, the rights,
benefits, and obligations set forth in this Agreement shall automatically be assigned to the
surviving or resulting corporation or to the transferee of the assets.
32. Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties hereto, with the full
intent of releasing all claims. The Parties acknowledge that:
(a) They have read this Agreement;
(b) They have been represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of their own choice;
(c) They understand the terms and consequences of this Agreement and of the releases
it contains;
(d) They are fully aware of the legal and binding effect of this Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth
below.
| Xxxxxxx Xxxxxx, an individual |
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| Dated: 3/6/06 | /s/ Xxxxxxx Xxxxxx | |||
| Xxxxxxx Xxxxxx | ||||
| Genesis Microchip Inc. |
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| Dated: 3/6/06 | By: | /s/ Xxxxx Xxxxxx | ||
| Xxxxx Xxxxxx | ||||
| President & Chief Executive Officer | ||||
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