EXHIBIT 10.63
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SEPARATION AGREEMENT
SEPARATION AGREEMENT, dated as of December 2, 1999, is by and between
ANNIE'S HOMEGROWN, INC., a Delaware corporation with a principal place of
business at 000 Xxxx Xxxxxx, Xxxxxxxxx, XX 00000 (the "Company") and XXXXXX X.
XXXXXX, an individual with a mailing address of X.X. Xxx 0000, Xxxxxx Xxxxxxx,
Xxxxxxx XX, Xxxxxxxx Xxxxx, Xxx Xxxxxxx ("Xxxxxx").
WHEREAS, Xxxxxx was the Chairman and Chief Executive Officer ("CEO") of
the Company;
WHEREAS, Xxxxxx'x employment as Chairman and CEO terminated in July
1999;
WHEREAS, Xxxxxx borrowed $75,000 from the Company on June 30, 1995
pursuant to a demand note accruing interest at 11% per annum (the "Personal
Loan");
WHEREAS, in December 1997, the Company cancelled the demand note for
the Personal Loan and Xxxxxx executed a secured promissory note (the "Secured
Note") in favor of the Company in the principal amount of $75,000, providing for
interest payable quarterly at 6.02% per annum, secured by a pledge of 25,000
shares of the Company's Common Stock, par value $0.001 ("Common Stock") owned by
Xxxxxx (the "Secured Personal Loan") pursuant to a Pledge Agreement dated as of
December 31, 1997 (the "Pledge Agreement");
WHEREAS, as of the date of this Agreement, the full balance due on the
Secured Note (including interest) is $82,517.78;
WHEREAS, certain of Xxxxxx'x expenses advanced by the Company have been
classified as personal expenses ("Advances");
WHEREAS, the total amount of the Advances outstanding as of the date of
this Agreement (including interest at 10% per annum) is $27,192.77;
WHEREAS, in October 1997, the Company entered into a Stock Purchase and
Loan Agreement ("1997 Stock Loan Agreement") pursuant to which the Company made
a five-year loan to Xxxxxx in the amount of $67,641.60 bearing interest at the
rate of 6.34% per annum (the "1997 Stock Loan") to enable him to purchase shares
of the Company's Common Stock upon exercise of certain options that were
previously granted to Xxxxxx;
WHEREAS, the 1997 Stock Loan Agreement provides for forgiveness of the
1997 Stock Loan over a five-year period if Xxxxxx remains employed by the
Company, pursuant to which one-fifth of the 1997 Stock Loan has been forgiven by
the Company as of this date, resulting in an outstanding balance as of the date
of this Agreement of $58,108.03;
WHEREAS, in December 1998, the Company entered into a Stock Purchase
and Loan Agreement ("1998 Stock Loan Agreement") pursuant to which the Company
made a five-year loan to Xxxxxx in the amount of $102,468.80 bearing interest at
the rate of 4.51% per annum (the
"1998 Stock Loan") to enable him to purchase shares of the Company's Common
Stock upon exercise of certain options that were previously granted to him;
WHEREAS, the 1998 Stock Loan Agreement provides for forgiveness of the
1998 Stock Loan over a five-year period if Xxxxxx remains employed by the
Company, pursuant to which none of the 1998 Stock Loan has been forgiven by the
Company as of this date, resulting in an outstanding balance as of the date of
this Agreement of $106,811.60;
WHEREAS, Xxxxxx currently holds 1,677,691 shares of the Company's
Common Stock; and
WHEREAS, Xxxxxx and the Company wish to set forth their respective
rights and obligations in connection with the termination of Xxxxxx as Chairman
and CEO and Xxxxxx'x repayment of the Secured Note, the Advances, the 1997 Stock
Loan and the 1998 Stock Loan.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Xxxxxx and the Company agree as
follows:
1. TERMINATION CONFIRMED; CONTINUING SERVICE AS A DIRECTOR. The parties
confirm that Xxxxxx'x employment as Chairman and CEO terminated on July 7, 1999,
effective July 31, 1999, but he remains a member of the Board of Directors. The
Company agrees to nominate Xxxxxx to the Board of Directors at the Company's
1999 Annual Meeting of Stockholders (or Special Meeting in Lieu of such Annual
Meeting) and to use its reasonable efforts to cause its officers and directors
to vote in favor of his election. Xxxxxx agrees to resign from the Board of
Directors effective on the Closing date of the transactions with Homegrown
Holdings Corp. ("HHC") described in a Term Sheet between HHC and the Company
executed by HHC on September 21, 1999. Xxxxxx'x resignation letter, attached
hereto as Exhibit A, shall be signed on the date of this Agreement, held in
escrow by the Company's counsel, and shall be dated by Company counsel and
released to the Company only on the HHC Closing date.
2. SEVERANCE. Upon execution of this Agreement by both parties, Xxxxxx
shall be entitled, and the Company will pay to Xxxxxx, severance equal to four
months of Xxxxxx'x base salary as of July 31, 1999 in the gross monthly amount
of $9,000 ("Severance"). The Severance shall be due and payable (and subject to
withholding, FICA, and similar deductions) ratably over a four-month period in
the Company's normal payroll periods. The Severance provided hereunder is in
lieu of the severance and change of control payments in a certain draft Change
of Control and Severance Agreement dated as of December 21, 1998 by and between
the Company and Xxxxxx, which the parties acknowledge is null and void.
3. REPAYMENT OF THE SECURED NOTE AND THE ADVANCES. The Company agrees
to accept shares of Common Stock as valid payment for the outstanding balance of
the Secured Note and the Advances, such shares to be valued at the greater of
(i) $1.50 per share, or (ii) the fair market value of such shares determined
with reference to any stock sale by the Company to a third party completed on or
prior to January 31, 2000; provided, however, that all payments in stock shall
be in accordance with the fastest payment schedule allowable under the
Irrevocable Stock Transfer Instructions, as amended, executed by Xxxxxx in 1995.
The Secured Note and the Advances, including all accrued interest shall be due
and payable on January 31, 2000 in cash or
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stock as set forth above, provided, however, that if the Company completes a
transaction with HHC on or before January 31, 2000, the Secured Note and the
Advances shall be due and payable as provided in Section 5 hereof.
4. AMENDMENTS TO STOCK LOAN AGREEMENTS. Simultaneously, with the
execution of this Agreement, the parties shall execute Amendments to the 1997
Stock Loan Agreement and the 1998 Stock Loan Agreement in the form attached as
Exhibits B and C. Exhibits B and C (i) change the due date on the 1997 Stock
Loan and the 1998 Stock Loan (collectively, the "Stock Loans") from 45 days
after termination of employment to January 31, 2000, unless the Company closes
on a transaction with HHC, in which event the Stock Loans shall be due and
payable quarterly over a five (5) year period pursuant to the Omnibus Secured
Promissory Note attached as Exhibit D, (ii) change the Company's repurchase
price for shares purchased with outstanding Stock Loans from the original
exercise price of the stock options to a price equal to the greater of (A) $1.50
per Share, and (B) the fair market value of shares of Common Stock determined
with reference to any sale of stock by the Company to a third party that is
completed on or prior to January 31, 2000, and (iii) delete Section 7 of each
Stock Loan Agreement, which created a pledge to the Company of Xxxxxx'x Common
Stock to secure the Stock Loans.
5. OMNIBUS SECURED PROMISSORY NOTE. Upon the closing of a transaction
with HHC on or before January 31, 2000, Xxxxxx agrees to execute the five-year
Omnibus Secured Promissory Note (the "Omnibus Note") substantially in the form
attached as Exhibit D and the Security Agreement attached as Exhibit E, pursuant
to which Xxxxxx agrees to repay the entire principal and accrued interest due to
the Company as of the date of the Omnibus Note under the Secured Note, Advances,
1997 Stock Loan and 1998 Stock Loan, bearing interest at the rate of nine
percent (9%) per annum, payable quarterly commencing with the first payment to
Xxxxxx xxxx HHC. Upon execution of the Omnibus Note, the Pledge Agreement shall
terminate. Pursuant to the Security Agreement, the Omnibus Note shall be secured
by an assignment to the Company of payments by HHC to Xxxxxx pursuant to a Stock
Collar Agreement between HHC and Xxxxxx, provided, however, that if HHC defaults
in its quarterly payments to Xxxxxx, Xxxxxx'x repayment obligation to the
Company for that same time period shall be tolled, with no further interest
accruing until the HHC default is cured, at which point Xxxxxx'x repayments to
the Company shall resume. The Omnibus Note shall be due and payable in full,
regardless of any default by HHC, five (5) years after the closing of the HHC
transaction. At Xxxxxx'x option, the Omnibus Note may be paid in cash or by
surrender of Xxxxxx'x Common Stock (if he then owns any unencumbered shares), at
the then fair market value as determined by the last sale price on the principal
exchange on which the Company's Common Stock is then listed, if any, or by the
Board of Directors, acting in good faith, if not so listed. If Xxxxxx disputes
the Board's determination, the Company and Xxxxxx will negotiate in good faith
and will use their best efforts to appoint an independent appraiser of the
Company's Common Stock, whose determination will be binding on the parties. In
the event that the parties fail to agree and appoint a mutually acceptable
appraiser within sixty (60) days, the determination of value of the Company's
Common Stock made by the Board will be binding on the parties. The costs of any
appraiser appointed under this Section will be borne by Xxxxxx, unless the
appraiser's determination of the value of the Common Stock exceeds the Board's
valuation by at least 10%, in which case the Company will bear the costs of that
appraiser.
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6. RELEASES.
(a) Other than those set forth in this Agreement, Xxxxxx, his heirs,
successors and assigns hereby remise, release and fully and forever discharge
the Company, and similarly release and discharge each of the Company's officers,
directors, stockholders, attorneys, assigns, agents, contractors,
representatives, servants, and employees who are, were or hereafter could be
liable, of and from all debts, demands, actions, causes of action, suits,
accounts, sums of money, reckoning, bonds, promises, acts, omissions, covenants,
policies, contracts, agreements, damages, executions, and any and all claims,
obligations, demands and liabilities, of whatever name, kind and nature, both in
law and in equity, both common law and statutory, both state and federal, which
against the Company or such agents Xxxxxx now has or ever had to this date with
respect or in connection with his employment by the Company or his service on
the Company's Board of Directors including his service as Chairman.
(b) Without limiting the generality of the foregoing, Xxxxxx
specifically and forever releases the Company from any and all claims and
damages arising therefrom, whether past, present or future, asserted or which
might have been asserted against the Company, including, but not limited to,
those related to Xxxxxx'x employment with the Company or the termination
thereof, or those arising out of any claim of wrongful and unlawful discharge,
violations of Title VII of the Civil Rights Act of 1964, as amended, the Civil
Rights Act of 1991, as amended, violations of the Equal Pay Act, as amended, the
Age Discrimination in Employment Act of 1967, as amended, the Americans with
Disabilities Act of 1991, as amended, violations of any state or municipality
fair employment statutes or laws, or violations of any other law, rule,
regulation, or ordinance pertaining to employment wages, hours or any other
terms and conditions of employment, and termination of employment.
(c) Xxxxxx further agrees not to commence or cause to be commenced on
his behalf or otherwise any administrative charge or claim, administrative
review or legal action of any kind against the Company asserting any claim or
charge arising from, or in any way relating to, his employment with the Company.
(d) Xxxxxx acknowledges and agrees that he freely and voluntarily
entered into this Agreement and, more specifically, the General Release
provisions herein. Xxxxxx agrees that no fact, evidence, event or transaction
occurring before the execution of this Agreement, which is currently unknown to
Xxxxxx, but which may hereafter become known to Xxxxxx, shall affect in any
manner the final and unconditional nature of the agreements and releases set
forth herein. Xxxxxx acknowledges that he has been advised that he has
twenty-one (21) days to consider the General Release contained in this Agreement
and that he should consult with his attorney prior to executing it. For a period
of seven (7) days after executing this Agreement, Xxxxxx may revoke this
Agreement (including the General Release contain herein) by providing written
notice of revocation to the Company and the General Release shall not become
effective or enforceable until the seven-day period has expired. In the event
Xxxxxx revokes this Agreement, the entire Agreement shall be null and void and
unenforceable against either party.
(e) Other than as set forth in this Agreement, the Company and each of
its officers, directors, stockholders, attorneys, assigns, agents, contractors,
representatives, servants, and employees hereby release and fully and forever
discharges Xxxxxx, his heirs, successors, assigns
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and attorneys of and from all debts, demands, actions, causes of action, suits,
accounts, sums of money, reckoning, bonds, promises, acts, omissions, covenants,
policies, contracts, agreements, damages, executions, and any and all claims,
obligations, demands and liabilities, of whatever name, kind and nature, both in
law and in equity, both common law and statutory, both state and federal, which
against Xxxxxx the Company or its agents now has or ever had to this date with
respect or in connection with his employment by the Company or his service on
the Company's Board of Directors.
(f) Without limiting the generality of the foregoing, the Company
specifically and forever releases Xxxxxx xxxx any and all claims and damages
arising therefrom, whether past, present or future, asserted or which might have
been asserted against Xxxxxx, including, but not limited to any claim for COBRA
payments or any claims related to Xxxxxx'x employment with the Company and/or
the termination thereof.
(g) The Company further agrees not to commence or cause to be commenced
on its behalf or otherwise any administrative charge or claim, administrative
review or legal action of any kind against Xxxxxx asserting any claim or charge
arising from, or in any way relating to, Xxxxxx'x employment with the Company.
7. GOVERNING LAW/VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts. The
parties, for themselves and their respective successors and assigns, irrevocably
submit to the jurisdiction of the state courts in Essex County, Massachusetts
(the county in which the Company's principal executive offices are located) or
the United States District Court for the District of Massachusetts with respect
to the entry of judgments arising out of arbitration as provided in Section 8
hereof. The parties irrevocably consent to service of any and all process in any
such action or proceeding to be made upon a party not having a last and usual
address in such state by substitute service effected by registered or certified
mail to the address for that party outside such state last known to the party
commencing such proceeding. In addition, the parties irrevocably waive, to the
fullest extent permitted by law, all objections they may now or hereafter have
to the laying of venue in such courts, and further irrevocably waive any claim
that any such forum is an inconvenient forum. The parties further agree that
final judgment in any such action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law.
8. ARBITRATION. If any dispute concerning this Agreement including but
not limited to, its existence, validity, interpretation, performance or
non-performance, arising before or after termination or expiration of this
Agreement, cannot be settled by negotiation, the parties agree first to try in
good faith to settle the dispute by mediation by the American Arbitration
Association in Boston, Massachusetts, under its Commercial Mediation Rules. If
mediation is unsuccessful, such dispute shall be settled by final and binding
arbitration before a single arbitrator in Boston, Massachusetts, in accordance
with the expedited commercial rules then in effect of the American Arbitration
Association. Judgment upon any award may be entered as provided in Section 7.
The cost of such arbitration shall be borne equally between the parties thereto
unless otherwise determined by the arbitrator.
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9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which (including signatures reproduced via facsimile)
shall be deemed an original.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understanding or agreements
concerning the subject matter hereof. This agreement may be amended, modified or
terminated only by a written instrument signed by the parties hereto.
11. INVALIDITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision. If any provision of this Agreement is or becomes or is deemed
invalid, illegal or unenforceable, such provision shall be deemed amended to
conform to applicable laws to the maximum extent permissible in any jurisdiction
so as to be valid and enforceable or, if it cannot be so amended without
materially altering the intention of the parties, it shall be stricken and the
remainder of this Agreement shall remain in full force and effect.
12. NON-DISPARAGEMENT. The Company and each of its officers and
directors agrees not to comment in a detrimental fashion or make any disparaging
remarks about Xxxxxx, his employment by the Company, his service on the Board of
Directors or his departure from the Company. Similarly, Xxxxxx agrees not to
comment in a detrimental fashion about the Company, its management and its Board
of Directors or about his departure from the Company. In addition to the
restrictions set forth in this Section 12, Xxxxxx agrees not to (i) publicly or
privately solicit proxies relating to the voting of any of the Company's Stock;
or (ii) contact, write to or otherwise communicate with, directly or indirectly,
any shareholder of the Company (other than relatives, family members, officers
or directors of the Company) making statements that are critical or disparaging
to the Company, its management, Board of Directors, business plans, financial
condition or prospects.
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Xxxxxx agrees not to
disclose and will maintain in confidence any confidential information of or
concerning the Company that he has obtained.
14. CONSULTATION WITH COUNSEL. Each party represents that it has been
represented by counsel in the negotiation of this Agreement, and Xxxxxx agrees
that (i) the payments, terms of repayment of the Secured Note, Advances, 1997
Stock Loan and 1998 Stock Loan and value of the consideration set forth in this
Agreement are more favorable to Xxxxxx than his prior obligations to the
Company; (ii) in deciding whether to sign this Agreement, Xxxxxx has not relied
on any statement or representation other than that which is expressly set forth
in this Agreement; (iii) he knowingly and voluntarily agrees to the terms set
forth in this Agreement; and (iv) he knowingly and voluntarily intends to be
legally bound by the same.
15. NOTICES. All notices, demands and communications provided for
herein or made hereunder shall be delivered in person, sent via certified or
registered mail, return receipt requested, or sent via overnight courier
requiring a signature for delivery, or sent via facsimile, provided notice is
also given by another approved means, addressed in each case as follows, until
some other address shall have been designated in a written notice to the other
parties hereto in like manner.
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If to the Company: Annie's Homegrown, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: President
With a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esquire
If to Xxxxxx: Xxxxxx X. Xxxxxx
P.O. Box 8487
Tauroa Station
Matangi RD , Havelock North
New Zealand
With a copy to: Xxxxx & Xxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esquire
16. FURTHER ASSURANCES. The parties shall each, at the request of any
of the others, furnish, execute and deliver such documents, instruments,
certificates, notices and further assurances as counsel for the requesting party
shall reasonably require as necessary or desirable to effect complete
consummation of this Agreement, or in connection with the preparation and filing
of reports required or requested by governmental agencies or other regulatory
bodies. The party requesting such documents or further assurances shall be
responsible for the costs of producing same.
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
it to be executed by their duly authorized officers as of the day and date first
hereinabove written.
ANNIE'S HOMEGROWN, INC.
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxx, Individually Xxxx Xxxxxxx, President
