TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (this "Agreement") is entered into this 14th day
of November, 1997, between and among XXXXXX XXXXX INCORPORATED, a Nevada
corporation (hereinafter referred to as the "Company"), and XXXXX X. XXXXXX, an
individual, on the following:
Premises
A. Xxxxx X. Xxxxxx in an original founder of the Company and has served
as the Chief Executive Officer and Chairman of the Board of the Company since
its inception.
B. The Company and Xxxxx X. Xxxxxx are parties to an Executive Employment
Agreement dated January 3, 1996.
C. The Company and Xxxxx X. Xxxxxx have agreed that Xx. Xxxxxx will
resign as an executive officer and director of the Company, based on the terms
and conditions set forth in this Agreement.
Agreement
NOW, THEREFORE, based upon the foregoing premises, which are incorporated
herein by reference, and for and in consideration of the mutual promises and
covenants hereinafter set forth, it is hereby agreed as follows:
1. Xxxxx X. Xxxxxx hereby resigns, effective as of the acceptance of such
resignation by the board of directors of the Company and the filing of the
quarterly report of the Company on Form 10-Q for the quarter ended September 30,
1997 (the "Effective Date"), as an officer and director of the Company and all
subsidiaries of the Company.
2. The Company agrees that on the Effective Date, it will pay Xx. Xxxxxx
all amounts then earned, plus an amount equal to three months of his current
salary and compensation for any unused vacation he may have, up to a maximum of
three weeks, calculated at his current salary rate. The Company shall also
transfer the automobile and notebook computer system currently used by Xx.
Xxxxxx and owned by the Company to Xx. Xxxxxx, subject only to the assumption by
Xx. Xxxxxx of the obligation of the Company associated with such automobile.
Xx. Xxxxxx shall also be entitled to a new, fully-featured Model 2900 sound
analyzer, with accessories, for his own personal use.
3. Xx. Xxxxxx agrees to remain available, in person and by telephone, to
consult with and assist new management of the Company concerning the business of
the Company during a 60 day transition period and thereafter as may be necessary
on a limited basis from time to time.
4. The Company agrees to award to Xx. Xxxxxx 190,000 shares of registered
common stock under the terms of its 1997 Employee Stock Option and Award Plan
reduced by an amount equal to $10,000 divided by the closing price of the common
stock of the Company as reported by Nasdaq on the date immediately preceding the
date of this Agreement. Such reduction shall be in complete satisfaction of the
obligation of Xx. Xxxxxx to the Company for a recent advance of $10,000. Such
shares shall not vest, and Xx. Xxxxxx shall not have the right to transfer or
hypothecate such shares, until the expiration of the 60 day transition period as
provided in the foregoing paragraph.
5. Xx. Xxxxxx agrees that the performance by the Company of the terms of
this Agreement shall be in full and complete satisfaction of all of his rights
and claims under the terms of the Executive Employment Agreement dated January
3, 1996 (the "Employment Agreement"). In addition, at the time of and in
exchange for, the issuance of the shares set forth in paragraph 4, Xx. Xxxxxx
shall deliver for cancellation the option held by him under the terms of the
Employment Agreement for 300,000 shares that was granted January 3, 1996, with
an exercise price of $4.25 per share and the option for 200,000 shares held by
him under the terms of the 1996 Director Stock Option Plan that was granted May
9, 1996, with an exercise price of $7.00 per share. The Company and Xx. Xxxxxx
mutually agree that the option held by Xx. Xxxxxx under the terms of the 1991
Director Stock Option Plan granted on June 30, 1995, to acquire 30,000 shares of
common stock, at an exercise price of $3.64375 per share shall remain in effect
and be governed by the current provisions of such option, including the right to
exercise such option at any time on the terms set forth therein.
6. Xx. Xxxxxx agrees that for a period of one year subsequent to the
Effective Date he will not establish or run any business that is directly
competitive with the business of the Company nor approach the customers of the
Company on behalf of any product that is competitive with the products of the
Company.
7. Each party hereto, for itself or himself and its respective officers,
directors, personal representatives, successors, assigns, and the affiliates of
all or any of the foregoing, hereby releases, discharges, and acquits each other
party, his or its officers, directors, agents, employees, attorneys,
accountants, personal representatives, successors, or assigns, or any affiliate
of all or any of the foregoing, from and against any and all losses, costs, or
damages, arising from, under, or in connection with the Employment Agreement,
any other written or oral agreement between the parties, any other business
relationship existing between them prior to the date hereof, and any claim,
demand, action, or cause of action of any kind or nature, whether known or
unknown, which the parties now have or claim to have, or any time heretofore
have claimed to have, or which may hereafter accrue, arising from, out of, or in
any way connected with all prior agreements, arrangements, or transactions
between the parties.
8. To the fullest extent permitted by applicable law, the Company agrees
to indemnify and hold harmless Xx. Xxxxxx on the same basis as other officers
and directors of the Company from and against any and all loss, cost and expense
incurred by Xx. Xxxxxx in connection with or arising from Xx. Xxxxxx being made
a party to a proceeding because Xx. Xxxxxx was an officer and/or director of the
Company. The Company agrees to maintain its officer and director insurance
currently in existence as of the date of this Agreement in full force and effect
for a minimum of three years from the Effective Date and to take all steps
necessary to assure that Xx. Xxxxxx remains covered by such insurance policy as
a former officer and director of the Company.
9. In order to more fully consummate the intent of the parties
represented hereby, each shall execute, acknowledge, and deliver to the other
such further instruments and documents as may be required to evidence the
termination of the agreements contemplated hereby and to consummate the terms
hereof.
10. It is the intent of the parties hereto to finally resolve all issues
that exist between them. In furtherance of that intent, the parties agree not
to disparage or impugn the business, business practices, or integrity of the
other parties hereto subsequent to the date of this Agreement.
11. The parties shall issue a press release in form and substance mutually
agreeable to both parties announcing the resignation of Xx. Xxxxxx and the
appointment of new management of the Company.
12. In the event of a breach of this Agreement, the breaching party shall
pay all costs and expenses of the other party, including reasonable attorneys'
fees, arising out of such breach.
13. This Agreement represents the entire agreement between the parties
relating to the subject matter hereof, and no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein, shall be of any force or effect. No amendment or
modification hereof shall be effective until and unless the same shall have been
set forth in writing and signed by the parties hereto.
DATED as of the date first above written.
XXXXXX XXXXX INCORPORATED
By
Xxxxxxx X. Xxxxxx, Director
Xxxxx X. Xxxxxx
