SEPARATION AGREEMENT
This SEPARATION AGREEMENT ("Agreement") is entered into by and between
XXXX XXXXX, an individual ("XX. XXXXX"), and DYNAMIC MATERIALS CORPORATION, a
Delaware corporation (the "COMPANY") (collectively referred to herein as the
"PARTIES"), as of September 1, 1998 (the "RESIGNATION DATE").
RECITALS
WHEREAS, Xx. Xxxxx has agreed to resign as a member of the Board of
Directors of the Company, and as the President and Chief Executive Officer of
the Company effective as of the Resignation Date and as an employee of the
Company effective as of October 4, 1998 (the "EMPLOYMENT SEPARATION DATE");
WHEREAS, the Company has accepted Xx. Xxxxx'x resignation and
wishes to provide Xx. Xxxxx with certain benefits, in consideration of his
service to the Company and the promises and covenants of Xx. Xxxxx contained
herein;
WHEREAS, Xx. Xxxxx and the Company desire finally to compromise, settle
and discharge all claims, controversies, demands, actions or causes of action
which Xx. Xxxxx, his family or agents may have or claim to have against the
Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants and
other good and valuable consideration contained herein, it is hereby agreed by
and between the Parties hereto as follows:
1. ACCRUED VACATION AND PERSONAL DAYS. The Parties acknowledge and
agree that the Company has paid Xx. Xxxxx concurrently with the signing of this
Agreement, all of his accrued vacation and personal days due and owed him
through the Employment Separation Date, and that he has not, and will not,
accrue any additional vacation or personal days after the Employment Separation
Date. Xx. Xxxxx acknowledges that he is not entitled to any payment in respect
of sick days.
2. PAYMENTS AND BENEFITS. The Company agrees to provide Xx. Xxxxx
with the following as part of this Agreement:
(a) PAYMENTS. In lieu of any and all other benefits or payments that
might be due or payable to Xx. Xxxxx in connection with the termination of his
employment with the Company, on the Effective Date (as defined in Section 6
hereof), the Company will pay to Xx. Xxxxx a lump sum payment equivalent to
seven (7) weeks of Xx. Xxxxx'x current salary.
(b) HEALTH INSURANCE. To the extent permitted by the federal COBRA
law and by the Company's current group health insurance policies, Xx. Xxxxx will
be eligible to continue health insurance benefits for himself and his family for
which the Company will pay until December 31, 1998 at which time the policy
shall convert to an individual policy. The Parties
acknowledge that Xx. Xxxxx has already been provided with a separate timely
notice of his COBRA rights.
(c) VEHICLE LEASE. With respect to the vehicle leased by the Company
for use by Xx. Xxxxx, Xx. Xxxxx will have this option: (1) Xx. Xxxxx may
purchase the vehicle pursuant to the terms and conditions contained in the
lease; or (2) Xx. Xxxxx may agree, subject to the approval of the bank holding
the lease, to assume lease payments from the Company. Xx. Xxxxx must choose one
option within thirty (30) days of the Resignation Date. During such period Xx.
Xxxxx will be the sole driver of the vehicle, except in cases of emergency. A
violation of the foregoing will result in the vehicle immediately being returned
to the Company.
(d) OTHER COMPENSATION OR BENEFITS. Xx. Xxxxx acknowledges that,
except as expressly provided in this Agreement, he will not receive any
additional compensation, bonus, severance or benefits after the Resignation
Date.
(e) STOCK OPTIONS. All stock options vested as of the Resignation
Date will continue to be exercisable under the standard terms and conditions of
the Company's applicable option plan
3. WITHHOLDING ISSUES. The Parties agree that the Company will
withhold all required federal, state and local income taxes and any other
required withholdings as necessary from all payments under this Agreement. Xx.
Xxxxx acknowledges that he will be entirely responsible for payment of any taxes
which may be due on the payments to be made to him under this Agreement. He
acknowledges and understands that the Company makes no representation or
warranty with respect to the tax treatment by any local, state or federal tax
authority of such payments. Xx. Xxxxx agrees to indemnify the Company and hold
it harmless with regard to any payment of tax, penalty or interest which the
Company may be required to pay by any tax authority with respect to payments to
be made to him under this Agreement.
4. EXPENSE REIMBURSEMENT. Xx. Xxxxx will be entitled to receive any
expense reimbursement, as of yet unpaid, for reasonable and approved business
expenses incurred through the Resignation Date. Signed expense vouchers for all
claimed reimbursement of expenses have been duly submitted to the Company or
will have been received by the Company within thirty (30) days of the
Resignation Date.
5. MUTUAL RELEASES
(a) RELEASE BY XX. XXXXX. Xx. Xxxxx, both in his individual capacity
and as a shareholder and prior officer and director of the Company, and on
behalf of his family, relatives, heirs, devisees, estate, agents and assigns,
hereby (i) releases, acquits, and forever discharges the Company, its officers,
directors, agents, servants, employees, attorneys, shareholders, successors,
assigns and affiliates, of and from any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys fees, damages, indemnities and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or
in any way related to agreements, events, acts or conduct at any time prior to
the Effective Date (as defined below) of this Agreement, including, but not
limited to: all such claims and demands directly or indirectly arising out of or
in any way connected
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with the Company's employment of Xx. Xxxxx or the termination of that
employment; claims or demands related to salary, bonuses, commissions, stock,
stock options, vacation pay, fringe benefits, severance pay, expense
reimbursements, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Americans with
Disabilities Act of 1990; the federal Age Discrimination in Employment Act of
1967, as amended ("ADEA"); Colorado's Labor and Employment Code; the Colorado
Anti- Discrimination Act of 1957, as amended; tort law; contract law; wrongful
discharge; discrimination; fraud; defamation; emotional distress; breach of the
implied covenant of good faith and fair dealing; interference with prospective
economic advantage, and interference with contract, and (ii) agrees to refrain
and forebear from asserting or otherwise bringing against the Company any such
claims. This release shall not apply with respect to the indemnification
provided by the Company to Xx. Xxxxx to the full extent permitted by Delaware
law for acts committed by Xx. Xxxxx within the scope of his employment with the
Company.
(b) CONDITIONAL RELEASE BY THE COMPANY. Except as to specific
obligations incurred by Xx. Xxxxx in this Agreement and subject to subsection
(c) of this Section, the Company hereby (i) releases, acquits, and forever
discharges Xx. Xxxxx, both in his individual capacity and as a shareholder and
prior officer of the Company, and his heirs, successors and assigns, of and from
any and all known claims, liabilities, demands, causes of action, costs,
expenses, attorneys fees, damages, indemnities and obligations of every kind and
nature, in law, equity, or otherwise, arising out of or in any way related to
agreements, events, acts or conduct at any time prior to the Effective Date (as
defined below) of this Agreement (the "KNOWN CLAIMS"), including, but not
limited to: all such claims and demands directly or indirectly arising out of or
in any way connected with the Company's employment of Xx. Xxxxx or the
termination of that employment, or Xx. Xxxxx'x serving on the Company's Board of
Directors or resignation therefrom; claims pursuant to any federal, state or
local law or cause of action; tort law; contract law; fraud; defamation; breach
of the implied covenant of good faith and fair dealing; interference with
prospective economic advantage, and interference with contract, and (ii) agrees
to refrain and forebear from asserting or otherwise bringing against Xx. Xxxxx
any such Known Claims.
(c) CONDITIONAL RELEASE TRIGGER EVENTS. From and after (90) days
following the Effective Date, during which the Company will conduct an
investigation relating to Xx. Xxxxx (the "INVESTIGATION"), the Company hereby
(i) releases, acquits, and forever discharges Xx. Xxxxx, both in his individual
capacity and as a shareholder and prior officer of the Company, and his heirs,
successors and assigns, of and from any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys fees, damages, indemnities and
obligations of every kind and nature, in law, equity, or otherwise, known or
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or
in any way related to agreements, events, acts or conduct at any time prior to
the Effective Date (as defined below) of this Agreement (the "UNKNOWN CLAIMS"),
including, but not limited to: all such claims and demands directly or
indirectly arising out of or in any way connected with the Company's employment
of Xx. Xxxxx or the termination of that employment, or Xx. Xxxxx'x serving on
the Company's Board of Directors or resignation therefrom; claims pursuant to
any federal, state or local law or cause of action; tort law; contract law;
fraud; defamation; breach of the implied covenant of good faith and fair
dealing; interference with prospective economic advantage, and interference with
contract, and (ii) agrees
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to refrain and forebear from asserting or otherwise bringing against Xx. Xxxxx
any such Unknown Claims (the "TOTAL RELEASE"); provided, however, that the Total
Release shall not apply to activities and incidents revealed, uncovered or
otherwise determined by the Investigation ("DISCOVERED ITEMS").
(d) INDEMNIFICATION. Xx. Xxxxx agrees to cooperate with the Company
in connection with the Investigation in all reasonable respects. The Company
will notify Xx. Xxxxx of any Discovered Items promptly after the ninety (90) day
period. The Total Release will apply at the end of the ninety (90) day period
except to the extent of any such Discovered Items, and any such Discovered Items
will be subject to indemnification as follows. Xx. Xxxxx agrees to promptly
indemnify and otherwise reimburse the Company for all claims based on any
Discovered Items, if and to the extent any such claim is judicially determined
in favor of the Company, together with associated legal and professional fees
and costs, including those related to the portion of the Investigation that gave
rise to the particular Discovered Item.
6. ADEA WAIVER. Xx. Xxxxx specifically acknowledges that he is
knowingly and voluntarily waiving and releasing any rights he may have under the
ADEA. He also acknowledges that the consideration given for the waiver and
release in the preceding paragraph is in addition to anything of value to which
he was already entitled. He further acknowledges that he has been advised by
this writing that: (a) his waiver and release do not apply to any claims that
may arise after the Effective Date of this Agreement; (b) he should consult an
attorney prior to executing this Agreement; (c) he has twenty-one (21) days
within which to consider this Agreement (although he may choose to voluntarily
execute this Agreement earlier); (d) he has seven (7) days following the
execution of this Agreement to revoke the Agreement; (e) this Agreement shall
not be effective until the date upon which the revocation period has expired,
which shall be the eighth day after this Agreement is executed by Xx. Xxxxx,
provided that the Company has also signed the Agreement by that date (the
"EFFECTIVE DATE").
7. FORM OF RESIGNATION. Xx. Xxxxx agrees to resign as a member of
the Board of Directors of the Company and as President and Chief Executive
Officer of the Company by signing the form of resignation attached hereto as
Exhibit A.
8. PUBLIC STATEMENTS.
(a) Xx. Xxxxx will not make any public statement or private statement
likely to be publicly disseminated that defames or otherwise disparages the
Company, any of its directors, officers, employees or its business, including
past and present actions and decisions of the Company.
(b) Neither the Company nor any of its representatives or affiliates
will make any public statement or private statement likely to be publicly
disseminated that defames of otherwise disparages Xx. Xxxxx or his performance
as the President and Chief Executive Officer of the Company or as a member of
the Board of Directors.
9. OTHER STATEMENTS. Xx. Xxxxx will not communicate in any way with
any stockholders, customers, suppliers or other interested parties of the
Company, including investment analysts, regarding the Company or its business.
If any such parties contact Mr.
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Xxxxx regarding the Company or its business, Xx. Xxxxx will state that he has
"no comment" and immediately refer such parties to Mr. Xxxx Xxxxxx ("XX.
XXXXXX").
10. SURRENDER OF PROPERTY. Xx. Xxxxx will return all files, records,
lists, administrative procedure guidelines, literature, products, equipment,
marketing material and all other materials owned by the Company which are used
by Xx. Xxxxx or in the custody of Xx. Xxxxx, including, but not limited to, all
personal computers, facsimile machines, other office equipment and rugs used or
stored in Xx. Xxxxx'x residence and all sporting event tickets, including
without limitation, the return of each specific item listed on Exhibit B
attached hereto or the equivalent cash payment listed on such Exhibit B. All
such items must be returned within two (2) days of the Resignation Date. Any
tickets held in Xx. Xxxxx'x name shall be transferred to the Company, along with
all possible priority rights in such tickets.
11. COMPANY PREMISES. Xx. Xxxxx agrees not to enter the Company's
premises for any reason after the Resignation Date. If Xx. Xxxxx requires access
to satisfy Paragraph 10 of this Agreement or to retrieve personal property, such
visits must occur after the Company's normal business hours and Xx. Xxxxx must
obtain permission from Xx. Xxxxxx, at least one (1) day in advance of such
proposed visit and be accompanied by two members of the Board of Directors and
Xx. Xxxxxx onto the Company's premises.
12. REIMBURSEMENT OBLIGATIONS. Xx. Xxxxx agrees to fully reimburse
the Company in the amount of Ninety Three Thousand Eighty-Five Dollars ($93,085)
for which he hereby acknowledges and agrees that he owes to the Company in
respect of certain advances and benefits received. Xx. Xxxxx will repay this
amount to the Company pursuant to the terms of the Promissory Note in the form
attached hereto as Exhibit C. As of November 1, 1998, if Xx. Xxxxx has not
satisfied the obligations of the Promissory Note, he may transfer Company stock
currently owned by him in an amount sufficient to satisfy the principal and
interest of the Promissory Note. The price of such stock shall be the average
price of the Company's stock for the ten (10) days prior to the transfer.
13. SECURITIES LAWS. Xx. Xxxxx acknowledges that he must comply with
all federal and state securities laws upon selling his stock into the open
market.
14. STANDSTILL. Except for capital stock owned and options vested as
of the Resignation Date, Xx. Xxxxx shall not purchase, acquire or own, or offer
or agree to purchase, acquire or own, directly or indirectly, any capital stock
of the Company (or enter into any arrangements or understandings with any third
party to do any of the foregoing or engage on behalf of any third party to do
any of the foregoing). The provision of this Section 13 shall cease to have any
further force or effect two (2) years from the Resignation Date. Xx. Xxxxx shall
immediately notify the Secretary of the Company in the event he is contacted by
any third party regarding any activities enumerated in this section or the like.
15. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the heirs, family, personal representatives, successors and
assigns of Xx. Xxxxx, and shall bind and inure to the benefit of Company, and
its successors and assigns.
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16. 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. Xx. Xxxxx represents and warrants that he has the capacity to act on
his own behalf, on his family's behalf and on behalf of all others 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.
17. CONFIDENTIALITY. The provisions of this Agreement shall be held
in strictest confidence by Xx. Xxxxx and by the Company and shall not be
publicized or disclosed in any manner whatsoever. Notwithstanding the
prohibition in the preceding sentence: (a) Xx. Xxxxx may disclose this
Agreement, in confidence, to his immediate family and to third parties in
connection with his transition arrangements, but only to the extent necessary;
(b) the Parties may disclose this Agreement in confidence to their respective
attorneys, accountants, auditors, tax preparers, and financial advisors; (c) the
Company may disclose this Agreement as necessary to fulfill standard or legally
required corporate reporting or disclosure requirements, and in connection with
third party due diligence related to the Company's financing, licensing,
strategic partnering and/or business combination activities, and within the
Company on a "need to know" basis (e.g. to its Board of Directors); and (d) the
Parties may disclose this Agreement insofar as such disclosure may be necessary
to enforce its terms or as otherwise required by law or legal process.
18. CONFIDENTIALITY AND ASSIGNMENT OF INVENTIONS. Xx. Xxxxx agrees
that as a key employee of the Company he is required to have executed a Key
Employee Proprietary Information and Inventions Agreement (the "PROPRIETARY
INFORMATION AGREEMENT") in the form attached hereto as Exhibit D. Xx. Xxxxx
further agrees that if he can not produce an executed Proprietary Information
Agreement within two (2) days of the Resignation Date, he will sign the form
attached as Exhibit D.
19. MUTUALITY OF DRAFTING. For purposes of construction, this
Agreement shall be deemed to have been jointly drafted by the Parties and their
counsel and any ambiguity shall not be construed against either Party.
20. ENTIRE AGREEMENT. This Agreement constitutes the complete, final,
and exclusive embodiment of the entire agreement between the Parties with
respect to the subject matter hereof and completely supersedes any and all prior
agreements between the Parties, including, but not limited to, all employment
agreements between the Parties, and shall be specifically enforceable. This
Agreement is executed without reliance upon any prior negotiation, promise,
agreement, warranty or representation, written or oral, by any Party or any
representative of any Party other than those expressly contained herein. Each
Party has carefully read this Agreement, has been afforded the opportunity to be
advised of its meaning and consequences by his or its respective attorney, and
signs the same of his or its own free will. This Agreement may not be amended or
modified except in a writing signed by both Xx. Xxxxx and a duly authorized
officer of the Company.
21. SEVERABILITY. If any provision of this Agreement is determined to
be invalid or unenforceable, in whole or in part, this determination will not
affect any other provision of this
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Agreement and the provision in question shall be modified by the court so as to
be rendered enforceable.
22. PARAGRAPH HEADINGS. The paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement
23. NO ADMISSIONS. It is understood and agreed by Xx. Xxxxx and the
Company that this Agreement represents a compromise settlement of various
matters, and that the promises and payments in consideration of this Agreement
shall not be construed to be an admission of any liability or obligation by
either Party to the other Party or to any other person.
24. APPLICABLE LAW. The Agreement shall be deemed to have been
entered into and shall be construed and enforced in accordance with the laws of
the state of Colorado as applied to contracts made and to be performed entirely
within Colorado.
25. COSTS AND FEES. Except as specifically set forth herein, the
Parties will bear their own costs, expenses, and attorneys' fees, whether
taxable or otherwise, incurred in or arising out of or in any way related to the
negotiation, preparation or review of this Agreement. If any Party brings an
action to enforce this Agreement, the prevailing party in such action shall be
entitled to recover his or its attorneys fees or costs, in addition to any other
relief to which that Party may be entitled.
26. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
27. NOTICES. Notices to Xx. Xxxxx will be sent to him at
0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000. Notices to the Company
shall be sent to Dynamic Materials Corporation, 000 Xxxxx Xxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, Attn: Xxxxxxx X. Santa, Chief Financial Officer.
28. EFFECT OF BREACH OF RELEASE. In the event Xx. Xxxxx breaches any
provisions of this Agreement, he will be in breach of the entire Agreement and
the release in Section 5(b) hereof will be automatically revoked and terminated.
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IN WITNESS WHEREOF, the Parties have duly authorized and caused this
Agreement to be executed.
XXXX XXXXX
Dated: , 1998 By:
--------------- --------------------------
DYNAMIC MATERIAL CORPORATION
ON BEHALF OF THE
BOARD OF DIRECTORS
Dated: , 1998 By:
--------------- --------------------------
Xxxxxx X. Xxxxxxxxxxxx
By:
--------------------------
Xxxxx X. Xxxxxxxx
