Settlement Agreement and Mutual Release - Centigram Communications Corp. and George Sollman
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release ("Agreement") is made by
and between Centigram Communications Corporation, a Delaware corporation (the
"Company"), and George Sollman, an individual residing in California
("Employee").
WHEREAS, Employee was employed by the Company;
WHEREAS, the Company and Employee have entered into a Confidential
Information and Invention Assignment Agreement (the "Confidentiality
Agreement");
WHEREAS, the Company and Employee have entered into a letter agreement
(the "Change in Control Agreement") dated October 8, 1991 pursuant to which
Employee has been granted certain rights in connection with any "Involuntary
Termination" within 12 months of a "Change of Control" of the Company (as
such terms are defined in the Change in Control Agreement);
WHEREAS, the Company and Employee have entered into an Employment
Agreement dated February 22, 1985, as amended by that certain First Amended
Employment Agreement between the Company and Employee dated as of January 6,
1986 and that certain Amendment No. 1 to First Amended Employment Agreement
between the Company and Employee dated as of May 13, 1991 (together with the
Change in Control Agreement, the "Employment Agreements");
WHEREAS, the Company has loaned $300,000 to Employee pursuant to a
Promissory Note dated as of April 1996, which loan has been secured pursuant
to a Stock Pledge Agreement between the Company and Employee dated as of
April 1996 (together, the "Note");
WHEREAS, the Company has advanced $10,000 to Employee in connection
with certain travel expenses (the "Advance");
WHEREAS, the Company and Employee have mutually agreed to terminate the
employment relationship and to release each other from any claims arising
from or related to the employment relationship;
NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Employee (collectively referred to as "the Parties") hereby agree
as follows:
1. Resignation. Employee resigned from his positions as the
Company's President and Chief Executive Officer effective April 15, 1997.
2. Consideration.
(a) Severance Payment. The Company agrees to pay Employee the
net sum of Two Hundred and Eighty Nine Thousand Three Hundred and Twenty
Dollars ($289,320), which number reflects applicable deductions and
withholding consistent with the Company's usual payroll practices, promptly
following the Effective Date (as defined in Section 28 hereof).
(b) Loan Forgiveness. At the later of the Effective Date or
January 1, 1998, (i) if Employee has satisfied the terms of Section 7 through
such date, the Note shall be canceled and of no further effect and the
principal and accrued interest owing thereon shall be forgiven and (ii) all
obligations of Employee to repay the Advance shall be forgiven and shall be
of no further effect, provided, however, that in the event that prior to the
later of the Effective Date or January 1, 1998, there shall occur a breach
of any representation, warranty, covenant or agreement on the part of
Employee set forth in this Agreement, then the terms of this Section 2(b)
shall be void and of no force and effect.
(c) Benefits. For the time period from April 15, 1997 through
April 15, 1999 (the "payment period"), Employee shall continue to participate
in the Company's health and dental insurance benefit plans in accordance with
the rules established for individual participation in such plans, as such
rules may be amended from time to time. The Company shall also reimburse
Employee for the actual cost of one medical exam per calendar year, such
amount not to exceed $650 per exam. In addition, the Company shall pay
Employee the actual cost of his maintaining a life insurance policy in the
amount of $1,000,000 on his own life (with such beneficiaries as he may
select) during the payment period and shall reimburse Employee for up to
$1,000 per year in costs incurred in connection with Employee's preparation
of federal and state income tax returns during the payment period. Except
as set forth in this Section 2(c), during the payment period, Employee will
not be entitled to accrual of any employee benefits, including, but not
limited to, vacation benefits or bonuses.
(d) Office Support. For the time period from April 15, 1997
through the earlier of (i) November 1, 1997 or (ii) such time as Employee
shall commence employment with a party other than the Company (the "office
period"), the Company shall allow Employee to maintain an office at the
Company's headquarters facility (the "office"). Such office shall be
selected by the Company in its sole discretion. In addition, during the
office period, (i) the Company shall provide Employee with reasonable
secretarial support at the office, and (ii) the Company shall reimburse
Employee for Employee's reasonable telephone expense incurred at the office,
such expense not to exceed $200 per month. Moreover, for the time period
from April 15, 1997 through the earlier of April 15, 1998 or such time as
Employee shall commence employment with a party other than the Company, the
Company shall provide Employee with continued access to e-mail and voice-mail
selected by the Company.
(e) Computer System. After the Effective Date, the Employee
may purchase the Dell 486 computer system now in his possession at its book
value in the event he notifies the Company of his intent to do so within ten
days following the later of (i) the Effective Date and (ii) receipt of
notification of such book value from the Company.
3. Board of Directors. Employee hereby irrevocably tenders his
resignation from the Company's Board of Directors, effective November 1,
1997. Employee acknowledges and agrees that he shall not be entitled to
receive any additional grants of stock or stock options by virtue of his
service on the Company's Board of Directors.
4. Options. Except as provided herein, the exercise of any stock
options held by Employee shall continue to be subject to the terms and
conditions of the Company's stock plans and the applicable stock option
agreements between Employee and the Company.
5. Employment Agreements. As of the Effective Date, the Employment
Agreements shall be canceled and of no further force or effect.
6. Consulting.
(a) During the period from April 15, 1997 through November 1,
1997 (the "first consulting period"), Employee shall make himself available
to the Company as a consultant at least two full working days during any one-
month period. In the event that the Company shall request in writing that
Employee perform consulting services on behalf of the Company during the
first consulting period (such services not to include Employee's service as
a member of the Company's Board of Directors), then the Company shall pay
Employee $200 per hour, in a minimum increment of four (4) hours for any
consulting day, for the performance of such services, payable in accordance
with the Company's regular payroll practices.
(b) During the period from November 1, 1997 through May 1,
1998 (the "second consulting period"), the Company shall request and Employee
shall perform consulting services on behalf of the Company at least thirty-
five hours during each calendar month period. Employee shall receive no
further compensation for the first thirty-five hours per month of such
services, and Employee acknowledges and agrees that the payments made
hereunder shall constitute full consideration for such services. Services in
addition to such thirty-five hours shall be compensated at the rate set forth
in Section 6(a) above. Employee and the Company further agree that all
options to purchase Common Stock of the Company granted by the Company to the
Employee, except those granted pursuant to grant number 002527 (granted
December 10, 1996 to purchase 117,700 shares of the Company's Common Stock
at an exercise price of $13.50 per share) and grant number 002528 (granted
December 10, 1996 to purchase 7,300 shares of the Company's Common Stock at
an exercise price of $13.50 per share) (the "Excepted Options"), shall expire
and be of no further force and effect, effective November 30, 1997, and that
the Excepted Options shall expire and be of no further force and effect on
the thirtieth day following the earlier of (i) the last day of the second
consulting period or (ii) such time following the thirtieth day of the second
consulting period as Employee shall not have performed at least thirty-five
hours of consulting services on behalf of the Company during any calendar
month of the second consulting period. The Company covenants that it shall
take all reasonable action under its control reasonably necessary to enable
Employee to perform consulting services on behalf of the Company at least
thirty-five hours during each calendar month until the last day of the second
consulting period (or such earlier time as Employee shall not have performed
at least thirty-five hours of consulting services on behalf of the Company
during any calendar month of the second consulting period). Employee and the
Company shall cooperate with each other to reasonably schedule the time, date
and location of performance of Employee's obligations pursuant to this
Section 6(b). Without limiting the generality of the foregoing, in the event
that the services requested by the Company to be performed by the Employee
in connection with this Section 6(b) must, by their nature, be performed on
a specific day and time, Employee shall have the right, if Employee is
subject to preexisting obligations conflicting with such day and time, to
request in good faith an alternative assignment, which request shall be
accommodated by the Company, provided that such right shall not be exercised
with regard to more than 10 days in any calendar month.
7. Covenant Not to Compete.
(a) During the first consulting period and the second
consulting period, Employee shall not, directly or indirectly, either as an
individual or as an employee, agent, consultant, advisor, independent
contractor, general partner, officer, director, shareholder, investor,
lender, or in any other capacity whatsoever, of any person, firm,
corporation, partnership or other entity or in any other capacity directly
or indirectly:
(1) own, manage, control or participate in the
ownership, management or control of, or be employed or engaged by or
otherwise affiliated or associated as a consultant, independent contractor
or otherwise with, any of Octel Communications Corporation, Boston
Technology, Inc., Converse Technology (S) Pte Ltd., Applied Voice Technology,
Inc., Active Voice Corporation or any other corporation, partnership,
proprietorship, firm, association or other business entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, any of the foregoing (a "Competitive
Business");
(2) induce or attempt to induce any person who at the
time of such inducement is an employee of the Company or any subsidiary
thereof to perform work or services for any other person or entity other than
the Company; or
(3) permit the name of Employee to be used in connection
with a Competitive Business.
Employee and the Company expressly acknowledge and agree that the
non-competition provisions contained in this Section 7 are entered into in
connection with Employee's service as a consultant of the Company and are
permissible and enforceable pursuant to the provisions of applicable law.
Nonetheless, if any restriction set forth in this Section 7 is held to be
unreasonable or unenforceable, then Employee agrees, and hereby submits, to
the reduction and limitation of such prohibition to such area or period as
shall be deemed reasonable.
8. Confidential Information. Employee shall continue to maintain
the confidentiality of all confidential and proprietary information of the
Company and shall continue to comply with the terms and conditions of the
Confidentiality Agreement between Employee and the Company. Employee shall
return all the Company property and confidential and proprietary information
in his possession to the Company on the Effective Date of this Agreement.
9. Payment of Salary. Employee acknowledges and represents that the
Company has paid all salary, wages, bonuses, accrued vacation, amounts
payable for sabbaticals not taken, commissions and any and all other benefits
due to Employee.
10. Release of Claims. Employee agrees that the foregoing
consideration represents settlement in full of all outstanding obligations
owed to Employee by the Company. Employee and the Company, on behalf of
themselves, and their respective heirs, family members, executors, officers,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, predecessor and successor corporations, and assigns,
hereby fully and forever release each other and their respective heirs,
family members, executors, officers, directors, employees, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, predeces-
sor and successor corporations, and assigns, from, and agree not to sue
concerning, any claim, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that any of them may possess arising from any omissions, acts
or facts that have occurred up until and including the Effective Date of this
Agreement including, without limitation,
(a) any and all claims relating to or arising from Employee's
employment relationship with the Company and the termination of that
relationship;
(b) any and all claims relating to, or arising from,
Employee's right to purchase, or actual purchase of shares of stock of the
Company, including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under applicable
state corporate law, and securities fraud under any state or federal law;
(c) any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of
contract, both express and implied; breach of a covenant of good faith and
fair dealing, both express and implied; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; and conversion;
(d) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair
Labor Standards Act, the Employee Retirement Income Security Act of 1974, The
Worker Adjustment and Retraining Notification Act, Older Workers Benefit
Protection Act; the California Fair Employment and Housing Act, and Labor
Code section 201, et seq. and section 970, et seq.;
(e) any and all claims for violation of the federal, or any
state, constitution;
(f) any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination; and
(g) any and all claims for attorneys' fees and costs.
The Company and Employee agree that the release set forth in this section
shall be and remain in effect in all respects as a complete general release
as to the matters released. This release does not extend to any obligations
incurred under this Agreement.
11. Acknowledgment of Waiver of Claims under ADEA. Employee
acknowledges that he is waiving and releasing any rights he may have under
the Age Discrimination in Employment Act of 1967 ("ADEA") and that this
waiver and release is knowing and voluntary. Employee and the Company agree
that this waiver and release does not apply to any rights or claims that may
arise under ADEA after the Effective Date of this Agreement. Employee
acknowledges that the consideration given for this waiver and release
Agreement is in addition to anything of value to which Employee was already
entitled. Employee further acknowledges that he has been advised by this
writing that (a) he should consult with an attorney prior to executing this
Agreement; (b) he has at least twenty-one (21) days within which to consider
this Agreement; (c) he has at least seven (7) days following the execution
of this Agreement by the parties to revoke the Agreement; and (d) this
Agreement shall not be effective until the revocation period has expired.
12. Civil Code Section 1542. The Parties represent that they are not
aware of any claim by either of them other than the claims that are released
by this Agreement. Employee and the Company acknowledge that they have been
advised by legal counsel and are familiar with the provisions of California
Civil Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND 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 SETTLEMENT WITH THE DEBTOR.
Employee and the Company, being aware of said code section, agree to
expressly waive any rights they may have thereunder, as well as under any
other statute or common law principles of similar effect.
13. No Pending or Future Lawsuits. Employee represents that he has
no lawsuits, claims, or actions pending in his name, or on behalf of any
other person or entity, against the Company or any other person or entity
referred to herein. Employee also represents that he does not intend to
bring any claims on his own behalf or on behalf of any other person or entity
against the Company or any other person or entity referred to herein.
14. Application for Employment. Employee understands and agrees
that, as a condition of this Agreement, he shall not be entitled to any
employment with the Company, its subsidiaries, or any successor, and he
hereby waives any right, or alleged right, of employment or re-employment
with the Company. Employee further agrees that he will not apply for
employment with the Company, its subsidiaries or related companies, or any
successor.
15. Confidentiality. The Parties hereto each agree to use
their best efforts to maintain in confidence the existence of this
Agreement, the contents and terms of this Agreement, and the consideration
for this Agreement (hereinafter collectively referred to as "Settlement
Information"). Each Party hereto agrees to take every reasonable
precaution to prevent disclosure of any Settlement Information to third
parties, and each agrees that there will be no publicity, directly or
indirectly, concerning any Settlement Information except as required by
court order or in connection with the Company's reporting obligations under
the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, or any state "blue sky laws." The Parties hereto agree
to take every precaution to disclose Settlement Information only to those
employees, officers, directors, attorneys, accountants, governmental
entities, and family members who have a reasonable need to know of such
Settlement Information.
16. No Cooperation. Employee agrees he will not act in any manner
that might damage the business of the Company. Employee agrees that he will
not counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the Company and/or any officer,
director, employee, agent, representative, shareholder or attorney of the
Company, unless under a subpoena or other court order to do so.
17. Non-Disparagement. Each party agrees to refrain from any
defamation, libel or slander of the other, or tortious interference with the
contracts and relationships of the other. All inquiries by potential future
employers of Employee will be directed to Dean Morton or such other
representative of the Company reasonably approved by the Employee. Upon
inquiry, the Company shall state no more than Employee's last position, dates
of employment and the statement set forth in paragraph 4 of the Company's
press release dated April 2, 1997, a copy of which is attached.
18. Tax Consequences. The Company makes no representations or
warranties with respect to the tax consequences of the payment of any sums
to or forgiveness of indebtedness of Employee under the terms of this
Agreement. Employee agrees and understands that he is responsible for
payment, if any, of local, state and/or federal taxes on the sums paid and
debt forgiven hereunder by the Company and any penalties or assessments
thereon. Employee further agrees to indemnify and hold the Company harmless
from any claims, demands, deficiencies, penalties, assessments, executions,
judgments, or recoveries by any government agency against the Company for any
amounts claimed due on account of Employee's failure to pay federal or state
taxes or damages sustained by the Company by reason of any such claims,
including reasonable attorneys' fees.
19. No Admission of Liability. No action taken by the Parties
hereto, or either of them, either previously or in connection with this
Agreement shall be deemed or construed to be (a) an admission of the truth
or falsity of any claims heretofore made or (b) an acknowledgment or
admission by either party of any fault or liability whatsoever to the other
party or to any third party.
20. Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement;
however, following the Effective Date, the Company will pay the reasonable
fees and expenses of one special counsel to Employee and reasonable
accounting fees and expenses incurred by Employee, in an aggregate amount not
to exceed $7,500.
21. Arbitration. The Parties agree that any and all disputes arising
out of the terms of this Agreement, their interpretation, and any of the
matters herein released, shall be subject to binding arbitration in Santa
Clara County before the American Arbitration Association under its California
Employment Dispute Resolution Rules, or by a judge to be mutually agreed
upon. The Parties agree that the prevailing party in any arbitration shall
be entitled to injunctive relief in any court of competent jurisdiction to
enforce the arbitration award. The Parties agree that the prevailing party
in any arbitration shall be awarded its reasonable attorney's fees and costs.
22. Authority. The Company represents and warrants that the
undersigned has the authority to act on behalf of the Company and to bind the
Company and all who may claim through it to the terms and conditions of this
Agreement. Employee represents and warrants that he has the capacity to act
on his own behalf and on behalf of all who might claim through him to bind
them to the terms and conditions of this Agreement. Each Party warrants and
represents that there are no liens or claims of lien or assignments in law
or equity or otherwise of or against any of the claims or causes of action
released herein.
23. No Representations. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and
understands the scope and effect of the provisions of this Agreement.
Neither party has relied upon any representations or statements made by the
other party hereto which are not specifically set forth in this Agreement.
24. Severability. In the event that any provision hereof becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision.
25. Entire Agreement. This Agreement represents the entire agreement
and understanding between the Company and Employee concerning Employee's
separation from the Company, and supersedes and replaces any and all prior
agreements and understandings concerning Employee's relationship with the
Company and his compensation by the Company.
26. No Oral Modification. This Agreement may only be amended in
writing signed by Employee and the President, Chairman of the Board, Chief
Financial Officer or Senior Vice President and General Manager, Service
Provider Division of the Company.
27. Governing Law. This Agreement shall be governed by the laws of
the State of California without regard to the conflict of laws provisions
thereof.
28. Effective Date. This Agreement is effective seven days after it
has been signed by both Parties (the "Effective Date").
29. Counterparts. This Agreement may be executed in counterparts,
and each counterpart shall have the same force and effect as an original and
shall constitute an effective, binding agreement on the part of each of the
undersigned.
30. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf
of the Parties hereto, with the full intent of releasing all claims. The
Parties acknowledge that:
(a) They have read this Agreement;
(b) They have been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of their own
choice or that they have voluntarily declined to seek such counsel;
(c) They understand the terms and consequences of this
Agreement and of the releases it contains;
(d) They are fully aware of the legal and binding effect of
this Agreement.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.
CENTIGRAM COMMUNICATIONS CORPORATION
Dated: August 1, 1997 By:
Dean O. Morton
Chairman of the Board
GEORGE SOLLMAN, an individual
Dated: August 1, 1997
George Sollman
APPROVED AS TO FORM:
WILSON SONSINI GOODRICH & ROSATI,
PROFESSIONAL CORPORATION
Attorneys for Centigram Communications
Corporation
Dated: August 1, 1997 By:
Todd Cleary
HELLER, EHRMAN, WHITE & MCAULIFFE
Attorneys for George Sollman
Dated: August 1, 1997 By:
Matthew P. Quilter