SEVERANCE AGREEMENT AND MUTUAL RELEASE
This Severance Agreement and Mutual Release ("Agreement") is made by and
between IQ Biometrix, Inc., a Delaware corporation, (the "Company") and Xxxx
Xxxxx ("Executive") (the Company and Executive are collectively referred to as
the "Parties") effective as of September 30, 2003 ("Effective Date").
WHEREAS, Executive was employed by Company pursuant to the terms of that
certain employment agreement entered into by and between the Company and
Executive (the "Employment Agreement");
WHEREAS, Executive was granted an option (the "Option") to purchase
600,000 shares of the Company's Common Stock pursuant to the Company's Stock
Option Plan (the "Plan");
NOW THEREFORE, in consideration of the mutual promises made herein, the
Parties hereby agree as follows:
1. Resignation.
(a) Executive Positions. Executive voluntarily resigns from his
positions of Secretary of Company, effective as of the Effective Date of this
Agreement (the "Resignation Date") and the Company accepts such resignation.
(All parties acknowledge that this Agreement has no effect on Executive's rights
and obligations as a Director of Company.) In connection with the termination of
Executive's employment on the Resignation Date, the Parties acknowledge and
agree that the Employment Agreement shall automatically terminate on such date;
provided, however, that any sections regarding confidentiality,
non-solicitation), return of property, and injunctive relief and enforcement of
the Employment Agreement shall survive the termination of the Employment
Agreement.
(b) Waivers. Executive hereby waives any and all right to
compensation and/or severance payments or benefits pursuant to the Employment
Agreement and the Company hereby waives any right to notice of such resignation.
The Parties further waive their respective rights to receive a "Notice of
Termination" as required by the Employment Agreement.
2. Consideration.
(a) Release. In exchange for the receipt of the consideration
described below, Executive shall release all claims arising from his employment
or any other relationship with the Company as of the Effective Date, as set
forth in Section 6 below.
(b) Payment. The parties acknowledge that Executive is owed an
aggregate $223,964.29 (the "Balance Due") comprised of (i) $115,646.62 in unpaid
salary ; (ii) $54,024.43 in unpaid expenses; and (iii) $54,293.24 in principle
and interest pursuant to a promissory note ($50,000.00 in principal and
$4,293.24 in accrued interest). Company shall deliver $100,000.00 of the Balance
Due in cash to Executive according to the following payment schedule:
i. $25,000.00 on or before October 7, 2003 (acknowledged as received);
ii. $25,000.00 on or before October 24, 2003;
iii. $25,000.00 on or before November 28, 2003;
iv. $25,000.00 on or before December 19, 2003.
The cash shall be applied first to satisfy unreimbursed expenses, with the
balance applied to the repayment of the note.
(c) Acknowledgment of Warrant. The Company further acknowledges the
existence of a warrant (the "Warrant") accruing at the rate of 5,000 shares per
month at an exercise price of $0.01 per share during the period in which the
promissory note remains outstanding. Conditioned upon the receipt by Executive
of the payments described in Section 2(b) above, the parties agree that the
number of shares accrued pursuant to the Warrant is currently, and shall be
capped at, 70,000 shares (the "Warrant Shares"), which Executive shall exercise
concurrently with the execution of this Agreement as further described in
Section 2(d) below. The exercise price for the Warrant Shares of $700.00 shall
be deducted from the balance due Executive prior to calculating the number of
shares due Executive upon the conversion described in Section 2(d) hereof.
(d) Conversion. The remaining portion of the Balance Due after the
payments to Executive contemplated in Section 2(b) above and the deduction of
the exercise price of the Warrant Shares described in Section 2(d) above,
totaling $123,264.29, shall be converted into fully paid and nonassessable
restricted shares of the Common Stock of IQ Biometrix, Inc. as follows: 189,637
shares (the "Shares") at $0.65 per share valued at $123,264.05.
(e) Company shall deliver one or more certificates representing the
Shares and the Warrant Shares to Executive within 30 days of the execution of
this Agreement.
3. Benefits. Executive acknowledges and agrees that his participation in
all benefits and incidents of employment shall cease on the Resignation Date and
further acknowledges and agrees that he will cease accruing employee benefits,
including, but not limited to, vacation time and paid time off, as of the
Resignation Date.
4. Payment of Salary, Expenses, Options.
(a) Subject to Company's performance under Section 2 hereof,
Executive acknowledges and represents that the Company has paid all salary,
wages, bonuses, accrued vacation, commissions and any and all other benefits due
to Executive.
(b) The parties agree that as of the Resignation Date, 325,000
shares of the Option have vested, and, pursuant to the terms of the Option
Agreement, no further shares of the Option shall vest. In the event that Company
elects to register the shares uynderlying the options of the other executives of
the Company, Company shall register the vested shares underlying the Option in
such registration process.
5. Release of Claims and Indemnity. Executive agrees that upon receipt of
all of the consideration described in Section 2 hereof, such consideration shall
represent settlement in full of all outstanding obligations owed to Executive by
the Company and its officers, managers, supervisors, agents and employees. Upon
the receipt of all of such consideration, Executive, on his own behalf, and on
behalf of his respective heirs, family members, executors, agents, and assigns,
hereby fully and forever releases the Company and its officers, directors,
employees, agents, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, predecessor and successor corporations, and assigns
(the "Releasees"), from, and agrees not to xxx concerning, any claim, 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
arising from any omissions, acts or facts that have occurred up until and
including the Effective Date of this Agreement.
The Company hereby fully and forever releases Executive from, and agrees not to
xxx concerning, any claim, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that it may possess arising from any omissions, acts or facts that
have occurred up until and including the Effective Date of this Agreement.
Furthermore, Company agrees to indemnify Executive for against any and all loss,
damage, claim, liability or expense resulting directly or indirectly from any
act, or acts, omission or omissions of Executive or Company whether known or
unkown, assuming such indemnification would otherwise be permissible pursuant to
the terms of the Company's charter documents and applicable law.
If Company fails to timely perform under Section 2 hereof, Executive shall apply
all payments received to the Employment Agreement and this Severance Agreement
and Mutual Release is of no further effect
Such claims released by Executive and Company include without limitation:
(a) any and all claims relating to or arising from 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 for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
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; and
conversion;
(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 Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Executive Retirement Income Security Act of 1974, the Worker
Adjustment and Retraining Notification Act, the Family Medical Leave Act, the
California Fair Employment and Housing Act, the California Family Rights Act,
and Labor Code section 201, et seq. and section 970, et seq. and all amendments
to each such Act as well as the regulations issued thereunder;
(e) any and all claims for violation of the federal, or any state,
constitution;
any and all claims arising out of any other laws and regulations relating to
employment or employment discrimination; andany and all claims for attorneys'
fees and costsExecutive 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.
6. Civil Code Section 1542. Executive represents that he is not aware of
any claims against the Company 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 1542, below, 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 statute or common
law principles of similar effect.
7. Confidentiality. Executive shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company.
Executive agrees to use his best efforts to maintain in confidence the existence
of this Agreement, the contents and terms of this Agreement, and the
consideration for this Agreement (hereinafter collectively referred to as
"Severance Information"). Executive agrees to take every reasonable precaution
to prevent disclosure of any Severance Information to third parties, and agrees
that there will be no publicity, directly or indirectly, concerning any
Severance Information. Executive agrees to take every precaution to disclose
Severance Information only to those attorneys, accountants, governmental
entities, and family members who have a reasonable need to know of such
Severance Information.
8. No Cooperation. Executive agrees he will not act in any manner that
might damage the business of the Company. Executive agrees that he will not
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 the Company and/or any officer, director,
employee, agent, representative, shareholder or attorney of the Company, unless
under a subpoena or other court order to do so.
9. Non-Disparagement. Executive agrees to refrain from any defamation,
libel or slander of the Company and its respective officers, directors,
employees, investors, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations, and assigns or tortious
interference with the contracts and relationships of the Company and its
respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns. Executive agrees that he shall direct all inquiries
by potential future employers to the Company's Chief Executive Officer. Upon
inquiry, and only to the extent said inquiry is directed to the Company's Chief
Executive Officer, the Company shall only provide information concerning the
position held by Executive and his dates of employment.
10. Non-Solicitation. Until the date two (2) years after the Resignation
Date, Executive agrees and acknowledges that he shall not either directly or
indirectly solicit, induce, attempt to hire, recruit, encourage, take away, hire
any employee of the Company or cause an employee to leave his or her employment
either for Executive or for any other entity or person.
11. Return of Property. Executive shall return all the Company property
and confidential and proprietary information in his possession to the Company on
the Resignation Date.Costs. The Parties shall each bear their own costs, expert
fees, attorneys' fees and other fees incurred in connection with this Agreement,
other than Company agrees to pay up to $1,000 for attorneys fees for Executive
to negotiate and review this Agreement.
12. Authority. 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.
13. No Representations. Executive represents that he has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.
14. Severability. In the event that 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.
15. Entire Agreement. This Agreement represents the entire agreement and
understanding between the Company and Executive concerning Executive's
separation from the Company, and supersede and replace any and all prior
agreements and understandings concerning Executive's relationship with the
Company and his compensation by the Company including, but not limited to, the
Promissory Note.
16. No Oral Modification. This Agreement may only be amended in writing
signed by Executive and the chief executive officer of the Company.
17. Governing Law. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of Delaware.
18. Effective Date. This Agreement is effective after it has been signed
by both parties and after eight (8) days have passed since Executive has signed
the Agreement (the "Effective Date"), unless revoked by Executive within seven
(7) days after the date the Agreement was signed by Executive.
19. Counterparts. This Agreement may be executed in counterparts, and each
counterpart 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.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.
IQ BIOMETRIX, INC.
a Delaware corporation
Dated: October ____, 2003 By
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Xxxxxxx Xxxxxxxxx
Chief Executive Officer
Xxxx Xxxxx
an individual
Dated: October ___, 2003
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Xxxx Xxxxx
