EXHIBIT 10.4
SEPARATION AGREEMENT
THIS AGREEMENT is made this first day of May, 2000, by and between FOCUS
Enhancements, Inc., A Delaware Corporation, hereinafter referred to as the
"Company", and Xxxxxx X. Xxxxxx, hereinafter referred to as "Employee".
RECITALS:
WHEREAS, beginning on or about December 18, 1992, Company and Employee
entered into an employment agreement, which was subsequently amended on
March 22, 1993, December 16, 1993, and restated on January 1, 1998
(collectively, the "Employment Contract"); and
WHEREAS, Employee owes to Company $140,000, plus interest, pursuant to
promissory notes dated January 6, 1996 and December 1, 1998 (collectively, the
"Notes");
WHEREAS, Employee has voluntarily chosen to sever the employment
relationship; and
WHEREAS, Employee and Company now desire to avoid any disputes or
differences regarding any prospective claims which may be asserted by Employee
regarding any entitlement to continuation of his employment with the Company;
NOW, THEREFORE, in consideration of the above recitals, which are
incorporated herein by this reference, and in further consideration of the
covenants, promises and conditions hereinafter set forth, Employee and Company
agree as follows:
1. Employee's employment with the Company shall be considered as and was
terminated effective April 28, 2000 ("Termination Date"). As of the
Termination Date, the Employment Contract shall be considered terminated by
Employee. Company acknowledges that termination of the Employment Contract
shall not contravene any rights that Employee may otherwise have to
continue to serve as Chairman of Company's Board of Directors for the
remainder of his elected term. Notwithstanding the foregoing, sections 2.3,
2.4, 2.5 and 2.6 of the Employment Contract shall survive termination of
this Agreement.
2. On the Termination Date, Company delivered to Employee all salary earned
and owed to Employee, less appropriate withholdings, through such date. All
remaining remuneration consisting of vacation pay (11 days totaling
$6,346.56) and unpaid bonus pay ($14,999.68.00) amounting to twenty-one
thousand three hundred forty-six dollars ($21,346.24) fifty-seven cents is
paid in hand herewith.
3. The Company agrees to and does deliver herewith to Employee in a certain
Consulting Agreement between Focus Enhancements, Inc., and Employee, dated
contemporaneously herewith, and is subject to all of the terms and
provisions of the Consulting Agreement. Company agrees that during the term
of the Consulting Agreement, all non-qualified stock options held by
Employee as of the date hereof, shall continue to vest and shall continue
to do so while Employee is a member of the Board of Directors.
4. This Separation Agreement is entered into voluntarily by the parties
without cause. The Company acknowledges that pursuant to extensive
investigation conducted during February-April 2000 by a Special Committee
of the Board of Directors and independent accounting firms, the Special
Committee made no findings that Employee had personal knowledge of or
involvement in inventory misstatements made by a company accounting
manager. The Company further acknowledges that Employee has fully performed
the duties and obligations of his employment with Company as defined in
Article 2 of the Employment Contract.
5. The Company agrees to reimburse Employee for COBRA expenses until (i)
Employee accepts employment with another company where employee is eligible
to participate in that company's health plan, or (ii) April 28, 2001,
whichever is earlier.
6. Employee shall have the right to retain all Company records currently in
his possession to assist him in his role as a member of the Board of
Directors.
7. The Company agrees to forgive all outstanding balances due to the Company
under the Notes, including interest, at a rate of one eighth (1/8) per
Company's fiscal quarter on the last day of each such quarter beginning
September 30, 2000, and continuing for eight fiscal quarters until such
Notes are paid in full. Further, as of the date hereof, all interest on the
Notes shall cease to accrue. Employee agrees, however, that should he
voluntarily resign from his position as a member of the Company's Board of
Directors for any reason prior to June 1, 2002, then any remaining
unforgiven portion of the Notes shall become immediately due and payable
and all interest that would have accrued but for this Agreement shall
accelerate and become due. Company agrees that in no event shall the amount
forgiven under the Note for which Employee shall receive an IRS form 1099
exceed $168,200.03.
8. Subject to approval by the Securities and Exchange Commission (SEC), the
Company agrees to make a public statement via a press release transmitted
via Business Wire, faxed to the Company's internal database, with a hard
copy to all employees in substantially the form attached hereto.
9. Employee acknowledges his continuing duties to maintain Company's
confidential information pursuant to an Employment Agreement executed
between the parties, and further expressly agrees that he/she will keep in
confidence and trust any proprietary information of the Company, which
includes, but is not limited to, trade secrets, copyrights, ideas,
techniques, know-how, inventions (whether patentable or not), and/or any
other information of any type relating to designs, configurations,
toolings, documentation, recorded data, schematics, source code, object
code, masterworks, master data bases, algorithms, flowcharts, formulae,
circuits, works of authorship, mechanisms, research, manufacture,
improvements, assembly, installation, marketing, forecasts, pricing,
customers, the salaries, duties, qualifications, performance levels and
terms of compensation of other employees, and/or costs or other financial
data concerning any of the foregoing or the Company and its operations,
generally. Employee further agrees not to use or disclose to any third
party any such information without the prior written consent of an officer
of the Company or without actual knowledge that the disclosure will be
governed by a Non-disclosure Agreement between Company and the third party.
Employee agrees that the herein covenant of confidentiality is a material
part of this Agreement.
10. Except with respect to issues related to pending class action litigation
and except as expressly provided herein to the contrary, each party hereto,
on behalf of itself and its respective servants, agents, representatives,
attorneys, insurers, predecessors, successors, administrators, trustees,
affiliated and related entities, assignors and assignees, officers,
directors, shareholders and employees, and each of them, releases the other
party hereto and its respective servants, agents, representatives,
attorneys, insurers, predecessors, successors, administrators, trustees,
affiliated and related entities, assignors and assignees, officers,
directors, shareholders and employees, and each of them, from any and all
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claims, demands, expenses, losses, causes of action, liabilities,
obligations, damages, liens and/or liabilities of any kind or nature
whatsoever, arising out of or related to Employee's employment with the
Company to the date of this Agreement, the negotiations preceding such
employment, and any and all facts, events or circumstances related thereto.
In addition, Employee agrees not to instigate or otherwise cause a negative
action to exist against Company, it officers or directors, including, but
not limited to, judicial actions, administrative actions, or message boards
relating to Company, except to the extent required by law.
Employee understands and expressly agrees that this Agreement extends to
all claims of every nature and kind whatsoever related to Employee's
employment with Company, known or unknown, suspected or unsuspected, past
or present, which existed before the date of execution of this Agreement,
including, but not limited to, any claims in tort or contract related to
Employee's employment or to any acts or omissions of the Company involving
Employee.
Nothing herein shall contravene Employee's rights to indemnity for prior
acts pursuant to the indemnity provisions of the Articles of Incorporation
nor shall this Agreement limit any coverage to which Employee would
otherwise be entitled under the Company's Directors and Officers Insurance.
11. The parties agree that the terms and provisions of this agreement shall
remain confidential, and each party hereto shall use their best efforts to
preserve such confidentiality.
12. The parties hereby agree that in any legal action or proceeding instituted
to enforce the terms of this Agreement, to seek a declaration of rights in
conjunction herewith, or otherwise relating to or arising out of this
Agreement, whether in tort or in contract, the prevailing or successful
party shall be entitled to recovery of its reasonable attorneys' fees,
costs, and other expenses, notwithstanding whether the action or proceeding
proceeds to trial or hearing, unless otherwise required by law.
13. This Agreement represents and contains the entire agreement and
understanding among parties hereto with respect to the subject matter of
this Agreement, and supersedes any and all prior oral and written
agreements and understandings. This Agreement may not be amended or
modified except by an agreement in writing signed by the party against whom
the enforcement of any modification or amendment is sought.
Each party to the Agreement represents that it has executed this Agreement
voluntarily and declares, warrants and represents that no promises,
inducements, or other agreements not expressly contained and set forth in
this Agreement have been made, and further, that the terms of this
Agreement are contractual and not merely a recital, and shall be construed
and enforced as such.
14. Each party hereto has been specifically advised of its right to counsel in
conjunction with the negotiation and formulation of this Agreement, and,
accordingly, this Agreement shall be construed as if negotiated and drafted
jointly by each of the parties hereto, and shall be interpreted and
construed accordingly.
Each of the parties to this Agreement, and/or their attorneys and
representatives, agree to execute any and all documents necessary to
effectuate the terms, conditions and purposes of this Agreement.
15. In the event that one or more of the provisions, or portions thereof, of
this Agreement is determined to be illegal or unenforceable, the remainder
of this Agreement shall not be affected thereby and each remaining
provision or portion thereof shall continue to be valid and effective and
shall be enforceable to the fullest extent permitted by law.
16. This Agreement shall bind and inure to the benefit of each party and each
party's agents, representatives, successors, heirs and assigns.
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17. This Agreement may be executed in any number or counterparts, each of which
shall be deemed to be an original, and all of which together shall be
deemed one and the same instrument.
18. This Agreement is the result of a compromise and settlement of claims
presently asserted or potentially assertable by Employee and Company, and
the consideration paid and received therefore is not to be construed as an
admission of any obligation or liability by any party hereto or by persons
not a part of this Agreement. Notwithstanding the foregoing, Company
acknowledges that no competent finder of fact has adjudged Employee as
having participated in any intentional misconduct.
19. Notwithstanding any other provision of this Agreement, each party hereto,
as a part of the consideration for this Agreement, agrees that any
controversy or claim arising out of this agreement or a breach thereof
shall, on written request or either party served on the other, be submitted
to binding arbitration. Judgment on the award rendered by the arbitrators
may be entered in any court having jurisdiction. The parties shall each
appoint one person to hear and determine the dispute, and if they shall be
unable to agree, then the two persons so chosen shall select a third
impartial arbitrator whose decision shall be final and conclusive upon both
parties. The cost of such arbitration shall be borne by the losing party,
or in such proportions as the arbitrators shall decide. Arbitration shall
take place in Boston, Massachusetts and shall be conducted in accordance
with the Rules of the American Arbitration Association.
Each party warrants and represents that this Agreement is executed by
individuals or entities on its behalf by a duly authorized partner, officer or
representative.
"Company" "Employee"
FOCUS Enhancements, Inc. Xxxxxx X. Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxx
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Printed: Xxxxxxx X. Xxxxxxxx Printed: Xxxxxx X. Xxxxxx
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Vice Chairman of the Board
Date: May ____, 2000 Date: May 1, 2000
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