EGGHEAD, INC.
DJ&J SOFTWARE CORPORATION
SEPARATION AGREEMENT
This Separation Agreement (the "Agreement") between Egghead, Inc.
and DJ&J Software Corporation (collectively, the "Company") and Ronald
P. Erickson ("Erickson") is dated as of August 1, 1994.
RECITALS
A. The Company and Erickson entered into an Executive Employment
Agreement dated as of February 22, 1993 (the "Employment Agreement"),
pursuant to which Erickson was employed as Vice Chairman of the Company.
B. Pursuant to notice dated February 10, 1994, the Employment
Agreement was terminated by the Company under Section 7.1 thereof.
C. After the termination of the Employment Agreement, the Company
employed Erickson "at-will" as Vice Chairman at the same base salary.
D. The Company and Erickson now desire to enter into a formal
separation agreement to end this employment relationship and to resolve
any and all the rights and obligations to each other.
E. The Company has advised Erickson of his right to consult an
attorney prior to signing this Agreement and has provided him with at
least 21 days to consider its severance offer and to seek legal
assistance. Erickson has either consulted an attorney of his choice or
voluntarily elected not to consult legal counsel, and understands that
he is waiving all potential claims against the Company.
AGREEMENT
As parties hereto, the Company and Erickson agree as follows:
1. Employment Agreement
The Company and Erickson hereby confirm the termination of the
Employment Agreement effective as of February 14, 1994 and further
confirm that all obligations of the Company under the Employment
Agreement are declared fully satisfied and are hereby terminated, except
to the extent expressly identified and set forth in this Agreement.
2. Termination of Employment
The employment of Erickson by the Company shall terminate
effective August 1, 1994.
3. Severance Payments
The Company shall pay to Erickson the following amounts as
severance payments:
(a) The amount of any presently unpaid salary earned by Erickson
through July 31, 1994, which amount shall not include accrued vacation
pay.
(b) The sum of $150,000 (before all customary payroll
deductions), such amount to be paid in equal installments on customary
payroll dates over a 12-month period with such period commencing on
August 1, 1994, provided that this Agreement has become effective
pursuant to Section 11. Such amounts shall be treated as compensation
and shall be subject to customary payroll deductions.
(c) The sum of $18,846.06, which constitutes the full amount of
any presently unpaid bonus to which Erickson is entitled under the
Employment Agreement for the fiscal year ended March 31, 1994. Such
amount shall be paid with the execution of this Agreement and shall be
subject to normal payroll deductions.
(d) The sum of $116,667 as a special bonus in respect of his
efforts in the Company's settlement of shareholders' class action law
suit filed against the Company and special projects in Japan. Such
amount shall be paid upon effectiveness of this Agreement under Section
11 and shall be subject to customary payroll deductions.
(e) The sum of $50,000, payable at such time as the Company
enters into a joint venture arrangement with a Japanese entity currently
participating in discussions with the Company, which arrangement is
satisfactory to the Company in its sole discretion. Such amount shall
be paid if, and only if, the Company enters into such arrangement on or
before January 1, 1995 and provided that this Agreement has become
effective under Section 11.
4. Consulting
From the date hereof until December 31, 1994, Erickson shall make
himself generally available to the Company to discuss and consult on
matters relating to the Company's plans, discussions and negotiations
with respect to joint ventures in Japan and, in connection therewith, to
make himself available for travel to Japan to meet with Japanese joint
venture prospects. Erickson shall be entitled to reimbursement to
reasonable out-of-pocket expenses consistent with the Company's then
current policies with respect to executive travel overseas. In
connection with such consulting services, Erickson shall not be required
to devote more than 20 hours per month, nor to be available for travel
to Japan for more than an aggregate of 14 days allocable to no more than
two trips, provided that the Company gives Erickson two weeks notice of
any such trip.
5. Benefits
From the date hereof until August 1, 1995, Erickson shall be
entitled to continue as a participant in medical and dental plans in
which he is a participant as of the date hereof, to the extent permitted
by law and by the terms and conditions of the plan.
6. Stock Options
The Company and Erickson confirm that stock option to purchase
50,000 shares of common stock at a price of $7.50 per share, evidenced
by Nonqualified Stock Option Agreement Number 3082, have fully expired
and Erickson has no rights to purchase common stock thereunder.
7. Noncompetition and Nonsolicitation
Erickson hereby confirms that he is and continues to be bound by
Sections 8 and 9 of the Employment Agreement, dealing with
noncompetition, nonsolicitation and nondisclosure, that Erickson's
obligations under such Sections shall survive the termination of the
Employment Agreement, and that the period of noncompetition and
nonsolicitation shall commence on August 1, 1994 and shall expire on
August 1, 1995.
8. Transition Matters
(a) Erickson represents that, to the best of his knowledge, he
has returned to the Company all Company property in his possession,
including without limitation, Board of Director, Senior Management team
and international development project documents (including all files,
reports, correspondence, contracts, proposals, strategic plans, manuals,
agendas, books, presentations and board packages), equipment, manuals,
files, reports, credit/identification cards, software, hardware and
keys; provided, that Erickson shall be entitled to retain the desk-top
IBM compatible computer, HP printer and related software currently in
his possession.
(b) Erickson hereby represents and warrants to the Company that,
other than as set forth in a report (the "Report") delivered to, or to
be delivered to, the President of the Company prior to the payments
provided for in Section 3(b),(d) and (e), there are no business
relationships, negotiations, plans, contacts, arrangements, commitments
(written or oral and including compensation, commission or severance
payment arrangements), or transactions entered into by Erickson,
individually or on behalf of the Company, (x) with business or entities
located in or doing business in Japan or Europe or with consultants,
agents or others acting in a similar capacity for such businesses or
entities or for the Company, or (y) with current or former employees of
the Company. The Report shall be in reasonable detail and attach
relevant documents.
9. Valid Consideration
Erickson and the Company acknowledge that payment by the Company
to Erickson certain of the amounts described in Sections 3 (particularly
Section 3(d)) is not required by the company policies or procedures, by
the Employment Agreement or by any other contractual obligation of the
Company, and is offered by the Company solely as consideration for this
Agreement.
10. General Release of Claims
(a) Erickson expressly waives any claims against the Company and
releases the Company (including its officers, directors, stockholders,
managers, agents and representatives) from any claims that he may have
in any way connected with his employment with the Company and the
termination thereof. It is understood that this release includes, but
is not limited to, any claims for wages, accrued vacation pay, bonuses,
employment benefits, or damages of any kind whatsoever, arising out of
any contracts, express or implied, any covenant of good faith and fair
dealing, express or implied, any theory of wrongful discharge, any legal
restriction on the Company's right to terminate employees, or any
federal, state or other governmental statute or ordinance, including,
without limitation, Title VII of the Civil Rights Act of 1964, the
federal Age Discrimination in Employment Act, the Washington Law Against
Discrimination, or any other legal limitation on the employment
relationship.
(b) Erickson represents that he has not filed any complaints,
charges or lawsuits against the Company with any governmental agency or
any court, and agrees that he will not initiate, assist or encourage any
such actions.
(c) This waiver and release shall not waive or release claims
where the events in dispute first arise after execution of this
Agreement, nor shall it preclude Erickson from filing a lawsuit for the
exclusive purpose of enforcing his rights under this Agreement.
11. Review and Revocation Period; Effective Date
Erickson shall have 21 days to review this Agreement and consult
legal counsel if he so chooses, during which time the proposed terms of
this Agreement shall not be amended, modified or revoked by the Company.
Erickson may revoke this Agreement if he so chooses by providing notice
of his decision to revoke the Agreement to the Company within seven days
following the date he signs this Agreement. This Agreement shall become
effective and enforceable upon expiration of this seven-day revocation
period.
12. Severability
The provisions of this Agreement are severable, and if any part of
it is found to be unlawful or unenforceable, the other provisions of
this Agreement shall remain fully valid and enforceable to the maximum
extent consistent with applicable law.
13. Knowing and Voluntary Agreement
Erickson represents and agrees that he has read this Agreement,
understands its terms and the fact that it releases any claim he might
have against the Company and its agents, understands that he has the
right to consult counsel of choice and has either done so or knowingly
waived the right to do so, and enters into this Agreement without duress
or coercion from any source.
14. Entire Agreement
This Agreement sets forth the entire understanding between
Erickson and the Company (except to the extent that Sections 8 and 9 of
the Employment Agreement shall survive as provided herein) and
supersedes any prior agreements or understandings, express or implied,
pertaining to the terms of his employment with the Company and the
termination of the employment relationship. Erickson acknowledges that
in executing this Agreement, he does not rely upon any representation or
statement by any representative of the Company concerning the subject
matter of this Agreement, except as expressly set forth in the text of
the Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the dates indicated below.
EGGHEAD, INC.
Terence M. Strom Ronald P. Erickson
Title: President & CEO
Dated: August 9, 1994 Dated: August 3, 1994