SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT ("Agreement") is entered into effective as of the
8th day of January, 2001 (the "Effective Date"), between and among XXXXXX
MARKETING, INC. (the "Company"), a Delaware corporation, XXXX X. XXXXX
("Begum"), an individual, PSF, INC. ("PSF"), a Utah corporation, and TREE OF
STARS, INC. ("Tree of Stars"), a Nevada corporation. The Company, Begum, PSF and
Tree of Stars shall sometimes hereinafter be referred to collectively as the
"Parties" and individually as a "Party."
WHEREAS, Begum is presently an officer and director of the Company; and
WHEREAS, the Company and Begum entered into a certain Agreement (which
Begum and the Company's Board of Directors agree was always intended to be a
consulting agreement calling for initial annual base compensation in the amount
of $200,004.00) dated effective July 4, 1998 (the "Consulting Agreement"); and
WHEREAS, PSF made a promissory note (the "PSF Note") payable to the Company
dated February 1, 2000, in the original principal amount of $191,776.46,
accruing interest at 8%, with a 36 month term, and which has a balance owing of
approximately $106,000.00 as of the Effective Date; and
WHEREAS, Begum has decided to retire from his officer responsibilities with
the Company effective as of the date hereof, upon the terms and conditions set
forth herein; and
WHEREAS, the Parties desire to release each other from all claims and
potential claims relating to Begum's service to the Company, prior to the
Effective Date, upon the terms and conditions set forth herein,
NOW, THEREFORE, in consideration of this Agreement and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
1. Resignation of Begum; Termination of Consulting Agreement Begum hereby
resigns his positions as an officer of the Company, and the Company hereby
accepts Begum's resignation, as of the Effective Date. The Parties further
terminate the Consulting Agreement in its entirety as of the Effective Date. The
Parties acknowledge that this Agreement is not an admission of any fault or
wrongdoing by any Party, but rather is intended to resolve and settle the issues
contained herein. The parties hereto acknowledge that Begum is not an employee
of the Company and, with the exception of the consulting services set forth in
Section 2.E. below, there now exists no agreement between the Company and Begum,
PSF, Tree of Stars or any other entity affiliated with Begum that provides for
services to be rendered to the Company.
2. Terms and Conditions of Resignation and Termination In consideration of
the provisions contained herein, the parties hereby act and agree as follows:
A. The Company shall pay the business expenses charged to Begum's Advanta
credit card up to $26,000.00 (any personal expenses on such Advanta credit card
shall be paid by Begum). Payment to be made at the minimal extent possible until
such time as the Company has funds in excess of its foreseeable needs to pay
additional amounts. Any, debt or equity funds received by the Company after the
Effective Date as a direct result of Begum's fund raising activities and debt or
equity funds received by the Company after the Effective Date in excess of
$250,000 from all sources other than the Xxxxx group to the extent the Company
is not restricted from using such funds for this purpose, shall be treated as
"funds in excess of its foreseeable needs" for purposes of the payment provided
in this subsection and in subsection B, below.
B. The Company shall pay Begum for services rendered as an independent
contractor to the Company $20,000.00 as soon as the Company has funds in excess
of its foreseeable needs and shall reduce the principal amount owing under the
PSF Note by $13,900.00.
C. The Company shall continue to make all lease payments due on the Lexus
vehicle that Begum is currently using through the end of the tease term, at
which time, Begum will be responsible to either purchase the vehicle personally
or return the vehicle pursuant to the lease. To the extent such lease. payments
exceed $500 per month (such amount is subject to verification), the Company
shall receive a credit towards its payment obligations under Sections 2.A, 2.B
or 2.E of this Agreement Begum shall pay all charges or payments required to
purchase or turn-in the vehicle at the end of the lease term.
D. The Company shall continue to make all lease payments due on the laptop
computer that Begum is currently using through the end of the lease term, at
which time, Begum shall comply with the lease with respect to disposition of the
laptop computer.
E. The Company hereby engages Begum as an independent consultant, and not
as an employee, for a period of seven months following the Effective Date; and
shall pay Begum $6,500.00 per month for seven months as a consulting fee with
the first payment due on January 31, 2001 and the remaining payments due on or
before the last day of each month thereafter until paid in full (i.e., February
28, March 31, April 30, May 31, June 30, and July 31, 2001). The Company and
Begum shall mutually agree on the nature and scope of the consulting. services
(which shall primarily be comprised of fund raising) that Begum will provide
during said seven-month period. The Company hereby agrees to reasonably
cooperate with Begum's fund raising activities. Such cooperation will include
providing promotional materials and having a Company representative attend fund
raising meetings that Begum has arranged.
X. Xxxxx will be personally responsible for his medical insurance premiums
effective January 1, 2001. The Company shall cooperate' fully with Begum in
making any COBRA insurance coverage that Begum may elect and have available.
X. Xxxxx shall transfer the cellular telephone that he is currently using
into his personal name and shall be responsible to pay all charges relating to
such telephone from and after January4, 2001.
H. The Company shall reimburse Begum for attorneys' fees and legal expenses
that he has personally incurred with Xxxxx Xxxxx through January 15, 2001 but
only up to a maximum of $3,000.00. Such reimbursement shall be made by the
Company upon Begum's submission to the Company of copies of invoices for such
fees and expenses.
I. The Company shall continue to reimburse Begum for all travel and related
expenses (e.g., travel, lodging, food, etc.) incurred in connection with
fundraising activities for the Company so long as such expenses are expressly
authorized and approved in writing by the President or CFO of the Company in
advance.
X. Xxxxx shall have the right, at any time prior to July 31, 2001, to
surrender to the Company and redeem 100,000 shares of the Company's common stock
owned by PSF in full satisfaction of all amounts owing under the PSF Note.
3. Effect on Stock Ownership. This Agreement shall not be deemed to have
any effect on the Company stock owned by Begum, PSF and Tree of Stars as of the
Effective Date. The Company acknowledges that immediately prior to the execution
hereof that Begum has been issued stock options pursuant to the Company's Stock
Incentive Plan providing for the purchase of the following shares of
stock in the Company: 225,000 shares (C) $2.75 and 12,000 shares (C) $2.75,
respectively. Said stock options are subject to the terms and conditions of said
Stock Incentive Plan. Begum acknowledges that he has no other rights or options
under said Stock Incentive Plan.
4. Acknowledgment of Return of Company Records and 'Removal of Personal
Property. The Company and Begum acknowledge and agree that Begum has returned to
the Company certain Company's records. In the 'event Begum discovers or has any
additional company records in his possession or under his control, he shall
promptly return such records to the Company. The Company and Begum further
acknowledge and agree that Begum has removed, with permission from the Company,
a small couch, a large couch, a coffee table, a lamp, 3 prints, a file cabinet
and a chair from Begum's Company office.
5. Mutual Releases; Reservation of Rights as to Certain Claims Except as
expressly reserved in this Agreement, the Company, Begum, PSF and Tree of Stars,
as well as their respective officers, directors and employees; hereby mutually
waive, discharge, acquit and release any and all claims, demands, damages,
losses, expenses, reimbursements, debts, payments, liabilities, costs and causes
of action of every kind, nature and character, that they now have or may have in
the future, whether now known or unknown, contingent or liquidated, against each
other and all of their respective employees, officers, shareholders, directors,
agents, representatives, attorneys, and all other related individuals and
entities, in any way resulting from any fact, circumstance, event, happening,
omission, or occurrence connected with, related directly or indirectly to, or
arising from stock ownership in the Company, the Consulting Agreement, all other
agreements providing for services to be provided to the Company, Begum's, PSF's
or Tree of Stars' services, if any, as an officer, director, employee and
consultant of the Company, and any loan, indebtedness, note or open account of
the Company up to and including the Effective Date. The Parties acknowledge and
agree that this Section 5 is intended to be, and should be interpreted as, a
.broad and general release with respect to the subject matter described herein.
Notwithstanding anything contained herein to the contrary, the Company is not
releasing Begum, PSF and/or Tree of Stars or their respective officers,
directors and employees from any right of contribution, cross claim, claims,
demands, damages, losses, expenses, reimbursements, debts, payments,
liabilities, costs and causes of action that arise as a result of a claim,
demand, damage, loses, expense, payments, liabilities, costs and causes of
action by a third party against the Company relating to a sale or transfer of
the Company's stock or a securities filing or failure to file a securities
filing. In the event Begum, PSF and/or Tree of Stars prevails on such a cross
claim or similar claim by the Company, then the Company shall reimburse such
prevailing party for all of its costs, including but not limited to its
reasonable attorney fees.
Notwithstanding the foregoing, the Company shall be permitted to conduct a
due diligence inspection during the period from the Effective Date to February
8, 2001 (the "Inspection Period") for the purpose of identifying any claims that
the Company may have against Begum. Begum expressly denies that any such claims
exist. The Company shall then notify Begum in writing within 5 days following
the expiration of the Inspection Period of any such claims (collectively, the
"Excepted Claims"). All such Excepted Claims, to the extent they exceed $5,000
in the aggregate and are timely disclosed in writing as provided herein, shall
be excluded from the mutual releases of the Parties provided above, and the
Parties shall reserve all of their respective rights, interests, causes of
action, remedies and defenses relating to such Excepted Claims.
6. Representations and Warranties. Each Party represents and warrants to
the other Parties that such Party has full power and authority to enter into
this Agreement and perform such Party's duties and obligations under this
Agreement, and that this Agreement is binding upon and enforceable against such
Party in accordance with its terms and conditions. Each Party further represents
and warrants to the other Parties that the execution, delivery and performance
of this Agreement will not violate any document, agreement, law, rule or
regulation applicable to or governing such Party. Each Party finally represents
and warrants to the other Parties that such Party has had the opportunity to
obtain independent accounting, financial and legal advice regarding the
advisability of executing, delivering and performing this Agreement. All
representations and warranties made by the Parties in this Agreement shall
survive the execution, delivery and performance hereof.
7. No Broker; Costs. No broker, finder, or other independent agent has
acted, nor will act, for or on behalf of any of the Parties in connection with
this Agreement. Except as expressly set forth in Section 2.H. above, the Parties
shall each pay their own costs and attorneys' fees associated with the
negotiation, drafting and execution of this Agreement.
8. Indemnification. Each Party agrees to indemnify, defend, and hold
harmless the other Parties from and against any and all loss, liability, or
damage, of any nature, arising out of or due to a breach of any representation,
warranty, duty, obligation or undertaking of such Party contained in this
Agreement.
9. Default; Remedies. In the event of a breach or default by any Party of
any of its representations, warranties, duties, obligations, or covenants
hereunder, any affected non-breaching Party shall send written notice of such
breach or default to the breaching Party, who shall then have ten (30) days in
which to cure such breach or default. In the event that the breaching Party
fails to cure the applicable breach or default within such ten (10) day period,
the affected non-breaching Party shall be entitled to exercise all remedies
available to it, whether by contract at law, or in equity.
10. Confidentiality, Nondisclosure and Nondispargement. The Company agrees
to maintain, and to instruct its officers, directors and employees to maintain,
the existence and terms of this Agreement confidential and that they shall not
disclose its existence or terms to any other person or entity without the prior
written consent of Begum, PSF or Tree of Stars, which request will not be
unreasonably withheld. Notwithstanding the forgoing, the Company shall be
entitled to disclose the existence and terms of this Agreement to its
professional advisors, such as lawyers and accountants, and 'potential debt or
equity investors on a need to know basis, as well as those various taxing,
security and other governmental authorities as the Company reasonably determines
shall be necessary pursuant to regulations, administrative rule or other legal
requirements of disclosure. The Company shall instruct its current officers,
directors and employees that when they, or any of them, receive an inquiry about
or in any way relating to Begum's present status with, or his resignation from,
the Company, they shall respond to such inquiry by indicating that, Begum has
resigned as an officer with the Company, but continues, if applicable in the
future, to serve as a member of the Company's Board Of Directors.
11. General Provisions.
A. Notices. All notices consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when: (i) delivered by hand (with written confirmation of receipt), (ii) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered or certified mail, return receipt requested, or (iii) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a Party may designate by notice to the other Parties):
(i) If to the Company, to: Xxxxxx Marketing. Inc.
000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone:
(000) 000-0000
Facsimile:(000) 000-0000
(ii) If to Begum, PSF or Tree of Stars, to:
x/x Xxxx X. Xxxxx
X.X. Xxx 00000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone:
(000) 000-0000
Facsimile:(000) 000-0000
or to such other address or addresses or telecopier numbers as any Party may
from time to time designate by notice to the other Parties.
B. Waiver. The rights and remedies of the Parties to this Agreement are
cumulative. Neither the failure nor any delay by any Party in exercising any
right under this Agreement will operate as a waiver of such right, and no single
or partial exercise of any such right will preclude any other or further
exercise of such right or the exercise of any other right.
C. Entire Agreement. This Agreement supersedes all prior agreements between
the Parties with respect to its specific subject matter set forth herein and
constitutes a complete and exclusive statement of the terms of the agreement
between the Parties with respect to such subject matter. This Agreement may not
be amended except by a written agreement executed by the'Party to be charged
with the amendment.
D. Governing Law; Jurisdiction and Venue. The laws of the State of Utah
shall govern this Agreement. The courts of Salt Lake County, Utah shall have
exclusive jurisdiction and venue with respect to all litigation arising under
this Agreement.
E. Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect.
F. Interpretation. No provision of this Agreement will be interpreted in
favor of, or against, any of the Parties hereto by reason of the extent to which
any such Party or its counsel participated in the drafting thereof or by reason
of the extent to which any such provision is inconsistent with any prior draft
hereof or thereof.
G. Attorneys' Fees and Expenses in the Event of Breach. In the event of a
breach or default by one of the Parties hereunder (the "breaching Party"), such
breaching Party shall pay to the other Party or Parties (collectively, the
"non-breaching Party") enforcement and collection costs, including . reasonable
attorneys' fees and legal expenses, regardless of whether breach is ultimately
cured, and regardless of whether formal legal proceedings are commenced. Costs
and expenses shall include, but not be limited to: (i) the non-breaching Party's
reasonable attorneys' fees and legal expenses, whether or not such expenses are
incurred by a salaried employee of the non-Breaching Party, (ii) reasonable
attorneys' fees and legal expenses for bankruptcy proceedings including, but not
limited to, efforts to modify or vacate any automatic stay or injunction. (iii)
reasonable attorneys' fees and legal expenses for appeals to higher courts
arising out of legal proceedings to enforce the breaching Party's obligations
hereunder, and (iv) any post-judgment collection services.
(the remainder of this page is intentionally blank)
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
above first written.
XXXXXX MARKETING, INC.
Attest: /s/ D. Xxxx Xxxxx By: /s/ Xxxx X. Xxxxxxxx
8 Jan 2001 Its: President/CEO
/s/ Xxxx X. Xxxxx
XXXX X. XXXXX
P.S.F., INC.
By: /s/ Xxxx X. Xxxxx
Its: President
TREE OF STARS, INC.
By: /s/ Xxxx X. Xxxxx
Its:President
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