Peregrine Systems Inc. Contracts
Sample Business Contracts
Severance Settlement Agreement and Release of Claims - Peregrine Systems Inc. and Alan H. Hunt
SEVERANCE SETTLEMENT AGREEMENT
AND RELEASE OF CLAIMS
This Severance Settlement Agreement and Release of Claims (the
"Agreement ) is made by and between Alan H. Hunt ("Hunt") and Peregrine
Systems, Inc. ("PSI") and effective this January 30, 1998.
RECITALS
A. Hunt was an employee and a Director of PSI until his resignation on
January 20, 1998, from all such positions and from any and all positions he
may have held with PSI and any of its foreign or domestic affiliates or
subsidiaries.
B. PSI and Hunt are parties to an Option Agreement dated November 1,
1995 pursuant to which Hunt was granted the right to acquire 400,000 shares
of PSI's Common Stock at an exercise price of $2.34 per share (the "Hunt
Option"). PSI and Hunt are parties to a Restricted Stock Agreement of
November 1, 1995 pursuant to which Hunt was granted the right to acquire
400,000 shares of PSI's Common Stock (the "Hunt Restricted Stock").
C. In connection with his resignation, Hunt and PSI have discussed
certain terms and conditions relating to the termination of the employment
relationship and the commencement of a consulting relationship.
D. It is the intent of the parties in entering this Agreement to set
forth all agreements between the parties and resolve all pending matters
between the parties.
NOW, THEREFORE, in consideration of the promises and mutual
agreements hereinafter set forth, it is hereby agreed by and among the
parties as follows:
I. COMPENSATION TO HUNT
1.1.1 HUNT OPTION. Notwithstanding any provisions of the Hunt
Option agreement to the contrary, and subject to termination as set forth in
paragraph 1.3.10 hereof, Hunt and PSI agree that as of January 31, 1999, all
vesting of the Hunt Option shall cease. The Hunt Options shall remain
exercisable until ninety days beyond January 31, 1999 pursuant to the terms
of the Hunt Option.
1.1.2 Hunt and PSI agree that the Hunt Option is hereby amended in a
manner that limits the change of control provision under the 1994 Stock Plan
and Hunt's stock option agreement in such a manner that the change of control
provision will not apply to any of the Hunt Option shares that will not vest
on the vesting schedule prior the January 31, 1999 cessation of vesting set
forth in the above paragraph.
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1.2.1 HUNT RESTRICTED STOCK. Notwithstanding any provisions of the
Hunt Restricted Stock agreement to the contrary, and subject to termination
as set forth in paragraph 1.3.10 hereof, Hunt and PSI agree that as of March
31, 1999, all vesting of the Hunt Restricted Stock shall cease.
1.2.2 Effective with the execution of this Agreement the 202,000
shares of Hunt Restricted Stock scheduled to lapse restriction after March
31, 1999 shall be immediately returned to PSI and Hunt hereby renounces all
right, title, and ownership of such shares.
1.3 CONSULTING AGREEMENT
1.3.1 Hunt agrees to act as a consultant to PSI and shall
provide such advice and assistance to PSI as the Chairman of the Board shall
reasonably request. Such advice and assistance shall include without
limitation the transition of the Chief Executive Office, and cooperation in
responding to requests for testimony, documentation or other information and
analysis relating to any litigation now pending, threatened, or in the future
arising against PSI and relating to actions or events occurring during Hunt's
tenure as an employee, director or officer of PSI.
1.3.2 The term of such consultancy shall commence on the date
hereof and shall continue for a period ending January 31, 1999.
1.3.3 During the term of his consultancy, PSI agrees to pay
Hunt at rate equal to his pro rata annual base salary at the level at the
time of his resignation (the "Annual Consulting Rate"). PSI agrees to pay
such amounts on the fifth (5th) day of each month during the consultancy term
at the rate of 1/12th of the Annual Consulting Rate.
1.3.4 PSI agrees to pay Hunt's COBRA payment for continuation
of his employee benefit plans for 12 months beyond his January 1998
termination. Such payment shall cease upon Hunt's taking employment within
the 12 months.
1.3.5 Hunt will not accrue any vacation benefits as a result of
this consulting arrangement.
1.3.6 PSI shall be under no obligation to provide Hunt with an
office or secretarial assistance during the term of his consultancy.
1.3.7 INDEPENDENT CONTRACTOR. The parties expressly intend
and agree that Hunt will act as an independent contractor and not as an
employee of PSI. Hunt understands and agrees that he shall not be entitled
to any of the rights and privileges established for PSI's employees. Hunt
understands and agrees that PSI will not pay or withhold from the
compensation paid to him pursuant to this Agreement any sums customarily paid
or withheld
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for or on behalf of employees for income tax, unemployment insurance, social
security, workers' compensation or any other withholding tax, insurance, or
payment pursuant to any law or governmental regulation, and all such payments
as may be required by law are the sole responsibility of Hunt.
1.3.8 NONDISPARAGEMENT. Hunt agrees that he will not make
any statements, written or verbal, disparaging the performance or business
reputation of PSI (including its officers, directors, employees, agents and
any related entities), or the personal or business reputation or character of
any employees of PSI.
1.3.9 COOPERATION. In the event of any claims, disputes or
litigation against PSI in which Hunt is named as a party or in which Hunt is
a witness or can be of assistance to PSI, Hunt agrees to make himself
available upon reasonable notice to meet with representatives of PSI and
provide them with such information and documents as he may have. Hunt shall
also make himself available, upon reasonable notice, to give sworn testimony
and statements, affidavits, depositions, trial testimony, declarations or
other such disclosures as may be necessary in connection with such
litigation. Nothing herein is intended or should be construed as requiring
anything other than Hunt's cooperation in providing truthful and accurate
information.
1.3.10 Hunt acknowledges that in the course of his prior
employment with PSI, and during the term of his consultancy, he has become
and will continue to become familiar with trade secrets and with other
confidential information concerning PSI and its affiliates and subsidiaries.
Therefore, Hunt agrees that, during the initial term of his consultancy and
any renewal term, and for one year (1) year thereafter, he shall not,
directly or indirectly, or through another entity, undertake any conduct, or
induce or attempt to induce any other person or entity to undertake any
conduct, not in the best of PSI. PSI reserves the right to determine, at the
sole discretion of its Board of Directors as comprised at the time of such
determination, whether the conduct as issue is in the best interest of PSI.
A breach of the obligations in any of section 1.3, 1.4, or 1.5 by Hunt shall
cause immediate termination of the Hunt Option and the Hunt Restricted Stock.
1.4 AGREEMENT NOT TO SOLICIT EMPLOYEES. Hunt agrees that during the
term of his consulting agreement herein and thereafter until February 1,
2001, he will not:
a. Induce or attempt to induce, any employee of PSI to leave
employment with PSI;
b. Interfere with or disrupt PSI's relationship with any of its
employees, consultants, customers, suppliers, or vendors; or
c. Solicit any employee of PSI to come to work for Hunt or Hunt's
subsequent employer(s).
1.5 NONCOMPETITION AND COVENANT NOT TO COMPETE
1.5.1 As a significant portion of the compensation paid to Hunt
pursuant to this
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Agreement, Hunt agrees that during the term of his consulting agreement
herein and thereafter until February 1, 2001 thereafter, he will not compete
with PSI. This noncompetition agreement is made in recognition of the
extraordinary skills and experience of Hunt in the industry in which PSI does
business, and PSI's exposure to Hunt of its most confidential and
competitively sensitive information, including, but not limited to PSI's
technical product information, pricing information, customer lists, patents,
engineering data, research and development plans, business methods, operating
procedures, and other such highly valuable trade secret information.
1.5.2 Hunt agrees that during the term of his consulting
agreement herein and thereafter until February 1, 2001 thereafter, he will
not act as an officer, director, employee, consultant, or agent for any of
PSI's competitors. In addition, for a similar period of time, Hunt agrees
that he will not directly or indirectly, alone or with others, engage in or
have any interests in, any business, firm, partnership, or corporation,
whether as an employee, officer, director, agent, creditor, consultant or
otherwise that engages in any activity that is the same or similar to, or in
competiton with, any activity engaged in by PSI.
1.5.3 In furtherance of his consulting agreement herein, Hunt
agrees to execute PSI's standard Invention and Non-disclosure Agreement, and
Arbitration Agreement. Hunt further agrees that, should he at any time
during the term of this Agreement seek to be become employed by or a
consultant for any competitor of PSI, PSI shall have the right to inform each
such company of this Agreement, as well as PSI's Invention and Non Disclosure
Agreement, and that disclosure of this information and any other necessary
and related communications by PSI shall not provide the basis for any legal
claim by Hunt against PSI.
1.5.4 This entire Agreement, including Noncompetition and
Covenant not to Compete paragraph, has been reviewed by legal counsel for
both parties. The parties intend and presume that this noncompetition
agreement is enforceable and intend that this Noncompetition and Covenant not
to Compete paragraph be given the fullest force and effect allowable by law.
In the event of nay alleged breach of this provision, PSI shall be entitled,
if it so elects, to institute and prosecute proceedings in any court of
competent jurisdiction, either in law or in equity, to enjoin Hunt from
violating this noncompetition provision, and to enforce the specific
performance of Hunt to the terms of this Agreement, and to obtain damages, or
nay of them, but nothing herein shall be construed to prevent such remedy or
combination of remedies as PSI may elect.
1.5.5 If for any reason an arbitrator or court of competent
jurisdiction finds that this Noncompetition and Covenant not to Compete
paragraph is not enforceable, in whole or in part, then the parties agree
that Hunt shall pay to Company one half of the amount of compensation paid by
PSI to Hunt to the date of such finding, not to exceed the sum of $50,000,
since a significant portion of the consideration being paid by PSI to Hunt is
for this Noncompetition and Covenant Not to Compete agreement.
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1.5.6 For purposes of this Section 1.5, PSI competitors shall
be any entity or organization involved in the development or implementation
of software which functions in the help desk industry.
II. GENERAL RELEASE OF CLAIMS.
2.1 Nothing contained in this Section 2 shall release or diminish
Hunt's obligations set forth in Section 1 of this Agreement.
2.2 Hunt, for himself, his wife, and for his heirs, assigns, executors,
affiliates, successors and each of them hereby acknowledges full and complete
satisfaction of releases and forever discharges PSI, its subsidiary
corporations, affiliates, and any and all of its past or present owners,
officers, directors, agents, shareholders, employees, attorneys, heirs,
assigns, executors, administrators and successors (hereinafter collectively
referred to as "PSI") from any and all claims, demands, actions, causes of
action, in law or in equity, suits, liabilities, demands, losses, costs or
expenses known or unknown, suspected or unsuspected, of any kind or nature
that Hunt now has or may have against PSI related including costs, expenses
and attorneys' fees. This full and complete release includes, but is not
limited to, claims relating to Hunt's employment with PSI. Hunt reserves,
and by this sentence expressly excepts from this release, Hunt's right to
seek indemnification from PSI against expenses, judgements, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding initiated by a third-party against Hunt for Hunt's
authorized conduct within the scope of his employment, including acts of
commission, during his employment by PSI.
2.3 Hunt acknowledges that he is aware of and is familiar with the
provisions of Section 1542 of the California Civil Code which provides as
follows:
A GENERAL RELEASE DOES NOT EXEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTELEMENT WITH THE
DEBTOR.
Hunt hereby waives and relinquishes all rights and benefits which he may
have under Section 1542 of the California Civil Code, or the law of any other
state or jurisdiction, or common law principle, to the same or similar effect.
2.4 Hunt acknowledges that he may discover facts or law different from,
or in addition to, the facts or law that he knows or believes to be true with
respect to the claims released in this Agreement and agrees, nonetheless,
that this Agreement and the releases contained in it shall be and remain
effective in all respects notwithstanding such different or additional facts
or the discovery of them.
2.5 Hunt declares and represents that he is executing this Agreement
with full
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advice from his legal counsel, and that he intends that this Agreement shall
be complete and shall not be subject to any claim of mistake, and that the
release herein expresses a full and complete release and, regardless of the
adequacy or inadequacy of the consideration, he intends the release herein to
be final and complete. Hunt and PSI execute this release with the full
knowledge that this release covers all possible claims, except as provided in
Section 2.1 above, and the right to enforce the provisions of this Agreement
as set forth herein.
2.6 Hunt irrevocably and absolutely agrees that he will not prosecute
nor allow to be prosecuted on his behalf, in any administrative agency,
whether federal, state or local, or in any court, whether federal, state, or
local, any claim or demand of any type related to the matters released in
this Agreement, it being his intention that with the execution of this
Agreement, PSI (as defined above) will be absolutely, unconditionally and
forever discharged of and from all obligations related in any way to the
matters discharged herein, subject only to the exception in Section 2.1
above.
III. GENERAL PROVISIONS
3.1 Hunt further agrees that he shall not directly or indirectly
disclose or use any trade secrets or other confidential or proprietary
information of PSI which came into, or will come into, Hunt's possession
during his employment and/or consulting relationship with PSI; provided, that
confidential information shall not include any information known generally to
the public, generally known to industry or in the public domain.
3.2 AGREEMENT TO RETURN PSI PROPERTY AND INFORMATION. Hunt agrees that
immediately upon his resignation from PSI, he shall return to the Company all
property of PSI including, but not limited to information stored on his
computer, product and pricing information, customer lists, research and
development plans, business plans, credit cards, keys and computers,
excepting his PSI-issued notebook computer.
3.3 Hunt and PSI agree that the terms and conditions of this Agreement,
and events which have lead to the parties entering into this Agreement, shall
remain confidential. The parties will make every effort to avoid disclosure,
directly or indirectly, of any of the terms, conditions, facts or
allegations, to any other person or entity. It is understood that the
parties may, if necessary, disclose information concerning this Agreement and
settlement or its terms, to their attorneys and accountants and /or as
required by law. Such disclosure shall not be a violation of this Agreement.
3.4 Hunt agrees that he will not voluntarily participate in, be an
expert witness in, be a party, or otherwise voluntarily involve himself in
any other litigation against PSI, its related corporations, divisions,
partners, officers, employees (past or present), agents, shareholders,
representatives, heirs, assigns, executives, administrators and successors,
or any of them. Hunt further agrees that he will not voluntarily assist in
any manner whatsoever any other party or litigant, in any action, against
PSI, its related corporations, divisions, partners, officers, employees (past
or present), agents, shareholders, representatives, heirs, assigns,
executives, administrators and successors, or any of them. Hunt agrees to
cooperate with and
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to assist PSI in the event any claims are made against PSI where his
assistance would be of value to PSI.
3.5 This Agreement has been reviewed by the parties hereto and their
respective attorneys, and the parties have had full opportunity to negotiate
the contents hereof. The parties hereto expressly waive any common law or
statutory rule of construction that ambiguity shall be construed against the
drafter of this Agreement, and acknowledge that both parties contributed
equally to the drafting of this Agreement.
3.6 The parties agree that this Agreement constitutes a compromise of,
and full accord and satisfaction of, doubtful and disputed claims and shall
not be treated as an admission of liability by anyone, at any time, for any
purpose.
3.7 All parties to this Agreement agree that they will bear their own
attorneys' fees, costs and all other expenses.
3.8 Any dispute or controversy arising between PSI (and its directors,
officers, or employees) and Hunt including, but not limited to, all potential
claims arising out of the consultancy relationship, such as breach of
contract, tort, discrimination, termination, compensation, and claims for any
violation of any law, statute, regulation, or ordinance, unless prohibited by
law shall be resolved by final and binding arbitration under the commercial
arbitration rules of the American Arbitration Association in effect at that
time. The arbitration shall be governed by California law. Judgment upon
the arbitrator's decision may be entered in any court of competent
jurisdiction. The arbitration fee shall be divided equally between Employee
and PSI.
3.8.1 At any time prior to the setting of a date for
arbitration, either party may elect in writing to submit the case to
nonbinding mediation. Mediation, if elected by either party, shall be in
advance of and not in substitution of the arbitration required by this
section. The mediation fee shall be divided equally between Employee and PSI.
3.8.2 In any action at law or equity between the parties
seeking enforcement of any of the terms and provisions of this Agreement, the
prevailing party in such action shall be awarded, in addition to damages or
other relief, his or its reasonable attorneys' fees. Such recovery shall
also include out-of-pocket expenses and attorneys' fees on appeal, if any.
The court shall determine the prevailing party pursuant to California Civil
Code Section 1717.
3.9 Should any court of competent jurisdiction determine that any term
or provision of this Agreement is unenforceable, such term or provision shall
be deemed to be deleted as though it had never been a part of this Agreement,
and the validity, legality and
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enforceability of the remaining terms and provisions shall not be in any way
affected or imperiled thereby.
3.10 Any and all notices and other communications that are required
or permitted to be given pursuant to this Agreement shall be in writing and
shall be deemed to have been duly given if hand-delivered or if mailed,
postage prepaid, by registered or certified return mail, to the respective
parties as follows:
If to Hunt:
Alan H. Hunt
P.O. Box 17108
Snowmass Village, CO 81615
If to PSI:
Peregrine Systems, Inc
Attn: President
12670 High Bluff Drive
San Diego, CA 92130
or to such other address or the attention of such other person as any such
party may direct by written notice delivered to other party pursuant to the
provisions of this Section and shall be effective upon receipt.
3.11 No waiver by any party hereto of any breach of this Agreement by
other party shall operate or be construed as a waiver of any other or
subsequent breach. No waiver by any party hereto of any breach of this
Agreement by any other party hereto shall be effective unless it is in
writing and signed by the party claimed to have waived such breach.
3.12 This Agreement may be amended only by a written instrument executed
by all parties hereto.
3.13 Subject to the exception set forth in Section 2.1 above (which has
no application to this paragraph), this Agreement is intended by the parties
to release and discharge any and all claims of Hunt, including any possible
claims arising under the Age Discrimination in Employment Act, 29 U.S.C.
Section 621, ET SEQ. It is the intent of the parties that this Agreement
satisfy the requirements of the Older Worker Benefit Protection Act, 29
U.S.C. Section 626(f). The following general provisions, along with the
other provisions of this Agreement, are agreed to for this purpose:
3.13.1 Hunt acknowledges and agrees that he has read and he
understands the terms of this Agreement;
3.13.2 Hunt acknowledges that he has been given a full
opportunity to consult
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with his lawyer with respect to the matters referenced in this Agreement, and
that Hunt has obtained and considered such legal counsel as he deems
necessary, such that Hunt is entering into this Agreement freely, knowingly,
and voluntarily;
3.13.3 Hunt acknowledges that he has been given at least
twenty-one (21) days in which to consider whether or not to into this
Agreement; and
3.13.4 This Agreement shall not become effective or enforceable
until seven (7) days after Hunt signs this Agreement.
3.13.5 This Agreement may be executed in counterparts by the
parties in order to expedite the execution of same.
3.14 In order to expedite the execution of this Agreement, the parties
agree that facsimile signatures are an acceptable means of expressing their
agreement to the terms and conditions of this Agreement and for all purposes
facsimile signatures shall have the same effect as original signatures. Any
party providing a facsimile signature further agrees, however, that within
five (5) days of execution of the Agreement, that party will provide their
signature on an original signature page to the other parties by overnight
commercial delivery service.
3.15 This Agreement shall be construed in accordance with the laws of the
State of California.
3.16 The agreements and releases contained in this Agreement bind and
inure to the benefit of the principals, agents, representatives, heirs,
successors and assigns of Hunt and PSI.
3.17 This Agreement contains the entire agreement and understanding
concerning the subject matter herein and supersedes and replaces any prior
negotiations or agreements between the parties hereto, or any of them,
whether written or oral, except as expressly provided herein. Each of the
parties acknowledges that neither party nor any agent or attorney of either
party has made any promise, representation or warranty, express or implied,
not contained in this Agreement to induce the other party to execute this
Agreement in reliance upon any such promise, representation or warranty not
contained herein.
3.18 All parties agree to cooperate fully and to execute any and all
supplementary documents and to take all additional actions that may be
necessary or appropriate to give full force to the basic terms and intent of
this Agreement and which are not inconsistent with its terms.
(signatures on following page)
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DATED: 2/5/98 /s/ ALAN H. HUNT
----------------------------- ------------------------
Alan H. Hunt
DATED: 2/5/98 PEREGRINE SYSTEMS, INC.
-----------------------------
By: /s/ RICHARD T. NELSON
----------------------------------
Richard T. Nelson
Its: Vice President
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