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Exhibit 10.20
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT ("Agreement") is made this 28 day of July,
1999 by and between XXXXXX X. XXXXX ("Xx. Xxxxx"), and NEW DIRECTIONS
MANUFACTURING, INC., a Nevada corporation ("New Directions" or the "Company")
(collectively, the "Parties").
RECITALS
WHEREAS, Xx. Xxxxx became employed by New Directions on January 1,
1997, as its President, Chief Operating Officer, and Chief Financial Officer.
WHEREAS, as of the Effective Date, the Company and Xx. Xxxxx agree that
Xx. Xxxxx shall resign from all officer positions held with the Company,
including President, Chief Executive Order and Chief Financial Officer.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Parties hereto agree as follows:
1 . Effective Date. August 1, 1999 is the Effective Date of this
Agreement.
2. Termination. Upon the terms and conditions set forth herein, the
Employment Agreement and corresponding employment of Xx. Xxxxx is hereby
terminated as of the Effective Date as specified in paragraph 1 hereof.
3. Director Status. Xx. Xxxxx is currently a director on the board of
directors of New Directions. Xx. Xxxxx will remain a director of the Company
until the next annual meeting of the shareholders when his successor shall be
nominated and elected.
4. Compensation Through the Effective Date. Until the Effective Date,
Xx. Xxxxx will continue to receive his current monthly compensation, benefits,
and $10,000 additional annual compensation payment. All such compensation,
including the $10,000 additional annual compensation payment, shall be paid to
Xx. Xxxxx no later than July 30, 1999.
5. Short Term Consultant Status. From August 1, 1999 through and
including December 31, 1999, Xx. Xxxxx will be engaged as a consultant to the
Company and will be paid a consulting fee of $7,153.80 per month beginning on
August 1, 1999. The form of Short Term Consulting Agreement between Xx. Xxxxx
and New Directions is attached hereto as Exhibit A and incorporated herein by
this reference.
6. Long Term Consultant Status. Beginning on January 1, 2000 and
continuing for a term of forty-eight months, Xx. Xxxxx will be engaged as a
consultant to the Company and Xx Xxxxx or his designee will be paid a monthly
consulting fee of $1,250 per month. The form of Long Term Consulting Agreement
between Xx. Xxxxx and New Directions is attached hereto as Exhibit B and
incorporated herein by this reference.
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7. Stock Repurchase. On August 1, 1999, the Company will purchase all
of the shares of common stock beneficially owned by Xx. Xxxxx for a flat sum of
$200,000 payable as follows: Beginning on January 1, 2000 and continuing on the
first day of each month for a total of forty-eight months, the Company shall
make installment payments of $4,166.67 to Xx. Xxxxx for the purchase of his
stock. The amount of these payments is not subject to adjustment for any reason,
including but not limited to any future reverse stock splits of the Company.
8. Premium Payment. If there is a change in control of the Company,
defined as a sale, merger or consolidation in which Company is not the
consolidated or surviving corporation, or a transfer of all or substantially all
of the assets of Company, Xx. Xxxxx will receive a premium in the form of the
dollar amount over and above the per share price paid in the change in control
as set forth below, on the purchase price of his stock.
Effective Date of Change in Control Per Share Sale Price
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08/01/99-12/31/00 $0.50
01/01/01-12/31/01 $1.00
01/01/02-12/31/02 $1.50
01/01/03-12/31/03 $2.00
For example, if the Company is sold on June 1, 2000, for a purchase price that
equals $0.70 per share, Xx. Xxxxx will receive a premium of $0.20 per share for
his original number of shares sold to the Company.
The Company shall use good faith and fair dealing in negotiating any
change in control of the Company. Further, the Company shall not issue any
securities for the sole purpose of diluting Xx. Xxxxx'x premium. No additional
shares or options shall be granted prior to December 31, 2003 to Xxxx Xxx or
Xxxx Xxxxxx without an adjustment to Xx. Xxxxx'x premium, except for the 900,000
options to Xx. Xxxxxx.
9. Payments Upon Demise. In the event of death of Xx. Xxxxx, all sums
due and owing to Xx. Xxxxx shall be paid to Xx. Xxxxx'x estate, including the
total amount of compensation payable under the Short Term Consulting Agreement
as set forth in section 5 hereof, the total amount payable under the Long Term
Consulting Agreement as set forth in section 6 hereof, the total amount of
compensation payable under the Stock Repurchase as set forth in section 7, and
the Premium Payment, if any, as set forth in section 8 hereof.
10. Life Insurance Policy. The life insurance policy currently held by
the Company on Xx. Xxxxx will be cancelled. Any cash value payable upon
cancellation of the policy will be retained by the Company.
11. Late Payments/Defaults. Any amount not paid by the Company within
ten days of its due date shall be a late payment. All such late payments shall
be charged interest at the rate of one and one-half percent (1.5%) per month on
the outstanding balance or at the highest rate allowed by law, whichever is
lower. Such interest charge shall be cumulative to all other remedies. Any
amount not paid by the Company within thirty days of its due date shall
constitute an event of
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default under this Agreement. Any breach of any other provision of this
Agreement shall also constitute an event of default. If an event of default
occurs, the Company shall have ten business days from the date of notice of the
event of default to cure. If the Company fails to cure the event of default
within ten business days from the date of notice, Xx. Xxxxx may pursue any and
all legal remedies available, including the acceleration of all sums due under
this Agreement such that the total of all sums due hereunder become immediately
due and payable.
12. Mutual Release. Except for the provisions of this Agreement and the
Short Term Consulting Agreement and the Long Term Consulting Agreement, for good
and valuable consideration, receipt of which is hereby acknowledged, each Party,
being of lawful age, fully and forever releases, waives, surrenders, acquits and
discharges the other Party and its officers, directors, agents, employees,
lawyers, accountants, representatives, and all other persons, firms,
corporations, associations and/or partnerships related to them of and from any
and all claims, demands, actions causes of action, rights, costs, expenses and
compensation of any nature whatsoever, hereafter accruing on account of, or
arising out of or relating to any and all known and unknown, foreseen and
unforeseen financial loss, personal and other incidental related expenses,
and/or violation of any personal, contractual, statutory or other legal rights
or privilege and the consequences thereof which were in any known or unknown
manner caused or occasioned to or sustained by either Party at any point in
time, arising out of Xx. Xxxxx'x employment, directorship, engagement, or
association with New Directions.
13. Indemnification. Each Party (the Indemnifying Party) agrees to
indemnify, defend, and hold harmless the other Party (the Indemnified party)
from and against any and all liability for injury to persons or damage to or
loss of property to the extent caused by the negligent act or omission of the
Indemnifying Party, its subcontractors, agents, or employees, including any and
all expense and costs, legal or otherwise, incurred by the Indemnified Party in
the investigation and defense of any claim, demand, or action arising out of the
work performed under this Agreement; provided, however, that the Indemnifying
Party shall not be liable for injury to persons or damage to or loss of property
caused by the sole negligence of the Indemnified Party, its subcontractors,
agents, or employees.
The Indemnified Party shall notify promptly the Indemnifying Party of
the existence of any claim, demand, or other matter to which the Indemnifying
Party's indemnification obligations would apply, and shall give them a
reasonable opportunity to settle or defend the same at their own expense and
with counsel of their own selection, provided that the Indemnified Party shall
at all times also have the right to fully participate in the defense. If the
Indemnifying Party, within a reasonable time after this notice, fails to take
appropriate steps to settle or defend the claim, demand, or the matter, the
Indemnified Party shall, upon written notice, have the right, but not the
obligation, to undertake such settlement or defense and to compromise or settle
the claim, demand, or other matter on behalf, for the account, and at the risk,
of the Indemnifying Party.
The rights and obligations of the Parties under this section shall be
binding upon and inure to the benefit of any successors, assigns, and heirs of
the Parties.
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14. Miscellaneous
14.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof and
supersedes all prior or contemporaneous agreements, understandings, negotiations
and discussions, whether oral or written, of the parties in connection with the
subject matter hereof, except as specifically set forth herein. No supplements
or modifications or waivers or terminations of this Agreement shall be binding
unless executed in writing by the parties to be bound thereby. No waiver of any
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision herein (whether or not similar, nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
14.2 Interpretation. The parties hereto acknowledge and agree that
each has been given the opportunity to independently review this Agreement with
legal counsel, and/or has the requisite experience and sophistication to
understand, interpret, and agree to the particular language of the provisions
hereof. In the event of an ambiguity in or dispute regarding the interpretation
of same, the interpretation of this Agreement shall not be resolved by any rule
of interpretation providing for interpretation against the party who causes the
uncertainty to exist or against the draftsman.
14.3 Execution of Documents. Each party agrees to execute and
deliver such other documents and instruments and to take such further actions as
may be reasonably necessary to fully carry out the intent and purposes of this
Agreement.
14.4 Counterparts; Facsimile Signatures. This Agreement may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. The Parties agree that facsimile signatures of this Agreement shall
be deemed a valid and binding execution of this Agreement.
14.5 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the heirs, legatees, estate, executors, legal
representatives, successors and assigns of the parties hereto.
14.6 Attorneys' Fees. In the event either party hereto shall
commence legal proceedings against the other to enforce the terms hereof, or to
declare rights hereunder, as the result of a breach of any covenant or condition
of this Agreement, the prevailing party in any such proceeding shall be entitled
to recover from the losing party its costs of suit, including reasonable
attorneys' fees, as may be fixed by the Court.
14.7 Governing Law; Jurisdiction. This Agreement has been entered
into and executed in the State of California and shall be interpreted in
accordance with the laws of said State. The parties hereby agree that the
jurisdiction for any dispute arising out of this Agreement shall be in Orange
County, California.
14.8 Conflict Waiver: The Parties hereto agree and acknowledge that
Xxxxxxx & Beam ("H&B" or "the Firm") represents New Directions. This Agreement
was drafted by H&B. The Parties hereto further acknowledge that they have been
informed of the inherent conflict of
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interest associated with the drafting of this Agreement by the H&B and waive any
action they may have against H&B regarding such conflict. All Parties to this
Agreement have been given the opportunity to consult with counsel of their
choice regarding their rights under this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
entered into as of the date first written above.
"New Directions"
New Direction Corporation, a Nevada corporation
/s/ Xxxx X. Xxx /s/ Xxxx X. Xxxxxx, Xx.
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BY: Xxxx X. Xxx BY: Xxxx X. Xxxxxx, Xx.
ITS: Chairman ITS: Secretary, Vice President,
and Director
"Xx. Xxxxx"
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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