EXHIBIT 10.1
SEPARATION AGREEMENT AND RELEASE
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This Separation Agreement and Release (hereinafter the "Agreement") dated
as of the 21st day of April, 1999, contains all terms and compromises reached
between Xxxxxxx X. Xxxxx ("Xx. Xxxxx"), CellStar Ltd. (hereinafter the
"Employer"), CellStar Corporation ("CellStar"), and all affiliated entities, in
connection with Xx. Xxxxx'x separation from employment with the Employer. It is
the intent of the parties, by entering into this Agreement, to resolve any and
all disputes, claims or causes of action which might now exist or arise in the
future between them.
IT IS THEREFORE AGREED THAT:
1. a. Employer and Xx. Xxxxx hereby mutually agree that Xx. Xxxxx'x
employment with Employer, CellStar and their affiliated entities will
automatically terminate effective upon the earlier to occur of (i) December 31,
1999, or (ii) upon written notice from the Employer advising Xx. Xxxxx that his
services are no longer required (hereinafter the "Termination Date").
Furthermore, effective upon the Termination Date, Xx. Xxxxx resigns from all of
his positions as an officer of CellStar and its affiliated entities. Xx. Xxxxx
shall remain on the payroll as an employee from the date of this Agreement to
the Termination Date and perform the duties reasonably assigned to him from time
to time by the Chief Executive Officer and Board of Directors of CellStar,
including the duties of President, Chief Operating Officer and Chief Financial
Officer of CellStar. Xx. Xxxxx will devote substantially all of his time,
energy, skill and best efforts to the performance of his duties, and will
faithfully and diligently perform such duties. During such time, Xx. Xxxxx'x
actions shall be subject to the direction of the Chief Executive Officer and the
Board of Directors of CellStar.
b. Effective on the date set forth in the first paragraph of this
Agreement, Xx. Xxxxx hereby resigns from all of his positions as a director of
CellStar and its affiliated entities.
2. In consideration for Xx. Xxxxx'x promises and covenants in this
Agreement, the Employer agrees:
a. to pay Xx. Xxxxx'x current salary through the Termination Date.
b. to pay Xx. Xxxxx an amount equal to the product of (A) the sum of Xx.
Xxxxx'x Base Salary (as such term is defined in the Employment
Agreement dated May 24, 1996 between Xx. Xxxxx and the Employer (the
"Employment Agreement")) at the rate in effect on the Termination
Date, plus the average of the Annual Incentive Payments (as such term
is defined in the Employment Agreement) paid to Xx. Xxxxx during the
preceding two (2) years (or such shorter period for which any Annual
Incentive Payment has been paid), divided by 365, and multiplied by
(B) the number of days from the Termination Date to May 24, 2001,
(less required withholding), payable fifteen (15) days following the
Termination Date.
c. that it will, pursuant to paragraphs 1.4(d), and (e), and (f) of the
Employment Agreement, continue such medical expense coverage, life
insurance and disability
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policies currently in effect for Xx. Xxxxx and, if applicable, his
wife and children, until May 24, 2001 (which sections are incorporated
herein by reference).
d. to allow Xx. Xxxxx to retain the laptop computer, 2 monitors, 2
docking stations and other miscellaneous computer related accessories
currently used by Xx. Xxxxx in connection with the performance of his
job duties.
e. to pay Xx. Xxxxx for accrued, but unused, vacation upon the
Termination Date.
f. that the unvested portion of the Initial Option (as defined in
paragraph 1.4(c) of the Employment Agreement) shall fully vest as of
the Termination Date, as required by Section 1.4(c) of the Employment
Agreement, which section is incorporated herein by reference.
g. to pay Xx. Xxxxx the Annual Incentive Payment (less required
withholding) pursuant to the last sentence of paragraph 1.6(d) of the
Employment Agreement (which section is incorporated herein by
reference) promptly after the amount of such payment is determined, if
such payment is earned in accordance with the terms of its grant.
The provisions of paragraph 1.7 of the Employment Agreement are
incorporated herein and shall apply if Xx. Xxxxx dies prior to the Termination
Date.
The provisions of paragraphs 1.4(c), (g), (h) and (i) of the Employment
Agreement are incorporated herein and shall remain in effect until the
Termination Date.
3. In consideration for the promises, payments and benefits provided
herein by Employer, and in order to fully compromise and settle any and all
claims and causes of action of any kind whatsoever relating to or arising out of
Xx. Xxxxx'x employment with Employer, including any claim arising under common
law, contractual claim (except for and as set forth in this Separation Agreement
and Release or in any stock option agreement existing at the Termination Date
between Xx. Xxxxx and CellStar), or any other federal, state or local statute or
ordinance, Xx. Xxxxx agrees:
a. that Xx. Xxxxx will and hereby does unconditionally release, acquit
and forever discharge Employer, all of its parent, subsidiary and
affiliated companies, and all of their officers, directors,
representatives, employees and agents from any and all charges,
complaints, claims, causes of action, suits and expenses (including
attorney fees and costs actually incurred) of any nature whatsoever,
known or unknown, regarding any matter existing on or prior to the
date hereof, including without limitation those obligations or matters
relating to or arising out of the Employment Agreement which is hereby
terminated and Xx. Xxxxx'x employment or separation thereof from
Employer, except as specifically expressed in this instrument or under
any stock option agreement existing at the Termination Date between
Xx. Xxxxx and CellStar. THIS RELEASE INCLUDES, BUT IS NOT LIMITED TO,
ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF THE EMPLOYMENT
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AGREEMENT (EXCEPT FOR AND AS SET FORTH IN THIS SEPARATION AGREEMENT,
AND IN ANY STOCK OPTION AGREEMENT EXISTING AT THE TERMINATION DATE
BETWEEN XX. XXXXX AND EMPLOYER), XX. XXXXX'X EMPLOYMENT WITH EMPLOYER
AND THE SEPARATION THEREOF, OR ANY BENEFITS ASSOCIATED WITH SUCH
EMPLOYMENT, INCLUDING ANY CLAIM UNDER TITLE VII OF THE CIVIL RIGHTS
ACTS OF 1964, THE AGE DISCRIMINATION IN EMPLOYMENT ACT, OR ANY OTHER
COMMON LAW, CONTRACTUAL OR STATUTORY CLAIM; and
b. that Xx. Xxxxx will not file any charges or complaints against
Employer or any of its affiliates with the Equal Employment
Opportunity Commission, the Texas Commission on Human Rights, or any
other local, state or federal agency or court, and that if Xx. Xxxxx
filed or has filed any such complaint or charge, and/or if any such
agency or court assumes jurisdiction of any complaint or charge
against Employer or any of its affiliates on behalf of Xx. Xxxxx, Xx.
Xxxxx will request such agency or court to withdraw from the matter
and dismiss said action.
4. Employer releases Xx. Xxxxx from any and all claims related to, or
arising out of, Xx. Xxxxx'x performance of his job duties; provided, however,
that Employer does not release Xx. Xxxxx from any claim related to, or arising
out of, any act performed or committed by Xx. Xxxxx in bad faith, which was not
in the best interests of the company or for which he had reasonable cause to
believe was unlawful or illegal.
5. Notwithstanding anything herein contained to the contrary, Xx. Xxxxx
shall have full rights as described in Article 3 of the Employment Agreement,
such rights, with respect to actions taken or omitted by him on behalf of the
Employer during his employment and also with respect to any third-party claims,
as set forth in Article 3 of the Employment Agreement, which provisions are
incorporated herein and remain in effect as if set forth herein in its entirety.
6. Except as required by law, all parties agree that they will keep the
terms, amount and existence of this Agreement completely confidential and that
neither party hereto will make any disparaging statements or allegations about
the other to any person or governmental agency, including comments about
Employer's employees, officers, directors or agents or about the reputations of
Employer or any such person. It is recognized that CellStar may be required to
file a copy of this Agreement with the Securities and Exchange Commission, issue
a press release relating to Xx. Xxxxx'x separation, and make other disclosures
required of a public company pursuant to applicable law, and any such filing,
press release or disclosure shall not be deemed to violate the provisions of
this Agreement.
7. The provisions of Article 2 of the Employment Agreement are
incorporated herein and remain in effect as if set forth herein in their
entirety, for a period of 2 years following Xx. Xxxxx'x termination. In
addition, with respect to any information or data, whatever its nature and form
and whether obtained orally, by observation, from written material or otherwise
obtained by Xx. Xxxxx during or as the result of Xx. Xxxxx'x employment by the
Employer and relating to any
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marketing techniques, business plans, customer lists, financial information,
financing arrangements, products, product prices or costs or plans of the
Employer or any of its affiliated entities, Xx. Xxxxx agrees:
a. To hold all such information in strict confidence, and not publish or
otherwise disclose any thereof except to or with the prior consent of
any authorized representative of the Employer.
b. To use all reasonable precautions to assure that all such information
is properly protected and kept from unauthorized persons.
c. To make no use of any such information.
d. To deliver to the Employer all written materials containing or
relating to such information, all of which written materials and other
things shall be and remain the sole property of the Employer. For
this purpose, "written materials" shall be deemed to mean and include
letters, memoranda, reports, notes, notebooks, books of account, data
and all other documents or writings, and all copies thereof.
Xx. Xxxxx'x agreement not to disclose information concerning this Agreement, the
Employer or any person connected with the Employer shall not apply to compulsory
disclosure pursuant to subpoena, deposition or other legal process. Xx. Xxxxx
shall promptly notify the Employer of the service of any subpoena or demand for
compulsory disclosure and shall refrain from making such disclosure for the
maximum period of time permitted by law, to permit the Employer to take such
actions as it may deem appropriate to have such service or demand set aside or
to protect the confidential nature of the information being sought.
8. During the period of time that Xx. Xxxxx remains employed with the
Employer, the provisions of 1.5(b) and 1.6(c) of the Employment Agreement remain
in effect; provided, however, that section 1.5(b) shall be amended as follows:
a. 1.5(b)(iii) is amended by adding the following language at the end of
that section: "where such failure causes or is likely to cause
material economic harm to Parent and its affiliated entities on a
consolidated basis or that brings or is likely to bring substantial
discredit to the reputation of Employer, Parent or any of their
affiliated entities taken as a whole."
b. 1.5(b)(v) is deleted.
In the event that Xx. Xxxxx breaches any provision of this Agreement after his
employment has ended, all future obligations of Employer under Section 2 of this
Agreement shall cease. As a further material inducement to enter into this
Agreement, any party who breaches this Agreement must reimburse the non-
breaching party for any and all loss, cost, damage or expense, including,
without limitation, attorneys fees incurred as a result of any effort, action or
lawsuit to enforce this Agreement. In addition, any breach of the Agreement
will entitle the non-breaching party to seek
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injunctive relief to enforce this Agreement and to recover any actual damages
incurred as a result of said breach. In the event of litigation, the losing
party must pay the attorneys fees of the prevailing party.
9. Xx. Xxxxx represents and acknowledges that in executing the Agreement
he does not rely and has not relied upon any representation made by Employer or
its agents, representatives or attorneys with regard to the subject matter,
basis or fact of said Agreement, except on those contained in this Agreement.
The parties agree that this Agreement represents a resolution of various matters
and shall not be construed to be an admission of any liability or obligation by
either party to the other party.
10. This Agreement shall be binding upon and inure to the benefit of Xx.
Xxxxx and, upon Xx. Xxxxx'x death, his heirs, administrators, representatives,
executors, successors and assigns. This Agreement shall be binding upon and
inure to the benefit of the Employer, all of its parent, subsidiary and
affiliated companies, and any corporation or other entity into which or with
which any thereof shall be liquidated, merged or consolidated.
11. This Agreement is made within the State of Texas and shall in all
respects be interpreted, enforced and governed under the laws thereof, and shall
in all cases be construed as a whole (according to its fair meaning and not
strictly for or against any of the parties).
12. Should any provision of this Agreement be declared or be determined
illegal and invalid, the validity of the remaining parts will not be affected.
13. The parties, by their signatures below, represent and agree that (a)
each has read this Agreement carefully and completely, and understands all
provisions contained therein; (b) Xx. Xxxxx has been given a period of at least
twenty-one (21) days to consider and review this Agreement; (c) Xx. Xxxxx has
seven (7) days after he signs this Agreement to revoke it ("the revocation
period"), in which case this Agreement and all obligations contained herein are
null and void; and (d) Xx. Xxxxx is aware of his right to consult with legal
counsel and has ample opportunity to do so if he so desires.
14. No change or modification of this Agreement shall be valid unless in
writing and signed by all parties hereto.
15. Xx. Xxxxx will cooperate with Employer in response to requests for
information or assistance by Employer in connection with all matters relating to
or arising out of his employment with Employer.
16. Xx. Xxxxx represents that he has not disclosed, and agrees that he
will not disclose material non-public information about Employer or any of its
parent, subsidiary or affiliate companies to anyone other than Employer's
officers, directors, attorneys and accountants.
17. Parent (CellStar Corporation) guarantees the payment and performance
of all obligations of Employer under this Separation Agreement and Release and
agrees it will pay or
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perform those obligations if for any reason Employer fails to do so. This
guarantee is absolute, continuing, irrevocable and not conditional or
contingent. Any notice given hereunder to either Employer or Parent will be
deemed to be notice to Parent for purposes of this guaranty.
18. MY SIGNATURE BELOW INDICATES THAT I HAVE READ THE ABOVE AGREEMENT AND
VOLUNTARILY AGREE AND CONSENT TO THE TERMS AND CONDITIONS THEREIN.
/s/ X X XXXXX Signed in Carrollton, Texas
--------------------------------- on 4/21 1999.
Xxxxxxx X. Xxxxx
SUBSCRIBED AND SWORN to before me, the undersigned Notary Public on this
the 21 day of April 1999.
/s/ XXXXX X XXXXXX
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[NOTARY SEAL APPEARS HERE] Notary Public in and for the
State of Texas
CELLSTAR LTD.
By: National Auto Center, Inc.
By: /s/ XXXX X. XXXXXXXXX Signed in Carrollton, Texas
----------------------------------- on 4-21 1999.
Xxxx X. Xxxxxxxxx
Chairman and CEO
CELLSTAR CORPORATION
By: /s/ XXXX X. XXXXXXXXX Signed in Carrollton, Texas
----------------------------------- on 4-21 1999.
Xxxx X. Xxxxxxxxx
Chairman and CEO
SUBSCRIBED AND SWORN to before me, the undersigned Notary Public on this
the 21 day of April 1999.
/s/ XXXXX X XXXXXX
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[NOTARY SEAL APPEARS HERE] Notary Public in and for the
State of Texas
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