EXHIBIT 4.9
SEPARATION AGREEMENT
SEPARATION AGREEMENT (this "Agreement") dated as of August 1, 2002 (this
"Agreement") by and between XYBERNAUT GMBH, a corporation organized under the
laws of the Federal Republic of Germany ("GMBH"), XYBERNAUT CORPORATION, a
Delaware corporation ("XC"; and GMBH and XC sometimes collectively, the
"Company"), and Mr. Daniel J. Butler ("Butler").
WHEREAS, Butler is employed by GMBH as the Director of GMBH; and
WHEREAS, Butler and the Company mutually wish to terminate Butler's
employment relationship with GMBH, upon the terms, provisions and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the covenants set forth herein, and
other good and valuable consideration, the receipt and legal adequacy of which
is hereby acknowledged, the parties agree as follows:
1. Butler hereby represents and warrants to the Company that he
understands all of the terms and provisions of this Agreement, the consequences
of entering into this Agreement and that Butler is entering into this Agreement
of his own free will, without any duress, after having had an opportunity to
review and discuss this Agreement with legal counsel of his choosing and such
other advisors as Butler considered appropriate.
2. Butler's employment by the Company in all respects shall terminate
by mutual agreement of the parties as of the date hereof, subject to this
Agreement being effective as of the Effective Date (as hereinafter defined). As
a result thereof, Butler represents and warrants to the Company that as of the
Effective Date Butler will remove all of his personal belongings from the
Company premises, wherever situated. Except for his personal belongings, Butler
shall not remove any property, assets, software or systems from any of the
Company's premises or the Company's systems, as applicable. In this regard,
Butler will have (i) no right to any unpaid salary or bonuses; (ii) no claim for
vacation leave, sick leave or similar accruals, or for payments on account of
any such accruals; (iii) no right to receive any payments or benefits from the
Company, including under any employee benefit plans or arrangements; (iv) no
vested right in any pension, profit sharing or other retirement, savings or
employee benefit plan of the Company; and (v) no right to reimbursement of
expenses incurred on behalf of the Company or otherwise, except to the extent
otherwise expressly set forth in this Agreement. The only payments to Butler
based upon or related to the termination of his employment with GMBH are those
expressly set forth in this Agreement.
3. (a) Butler acknowledges and agrees that the Company has informed
him that he will receive a severance benefit if, and only if, he executes this
Agreement and fully complies with all of its terms and provisions. Butler
further acknowledges and agrees that he understands that the Company will not be
required to provide the severance benefit until the Effective Date of this
Agreement. Subject to the foregoing, Butler shall receive four (4) months
of his salary under Butler's current Employment Contract with GMBH (the
"Employment Agreement"), by being issued 160,264 shares of common stock, par
value $0.01 per share of XC (the "Common Stock"), together with an additional
8,013 shares of Common Stock, for a total of 168,277 shares of Common Stock (the
"Shares"). This severance payment should replace and supercede in its entirety
any severance benefit provided for in the Employment Agreement. XC grants Butler
piggyback registration rights on the next registration statement filed by XC
which presently anticipates to be in the first two weeks of September 2002 with
respect to all of the Shares.
(b) Promptly following the execution and delivery of this
Agreement, XC shall cause the GMBH to pay all salary and other benefits to
Butler which are payable to him for the period ending on July 31, 2002.
(c) GMBH shall pay Butler(euro)601.03 in respect of accrued and
unpaid business expenses.
(d) If Butler physically relocates to the United States, as his
principal residence at any time prior to October 31, 2002, the Company shall
reimburse Butler for up to $10,000 of moving expenses upon presentation of
appropriate documentation.
4. In order to induce XC to issue the Shares pursuant to Section 3(a)
hereof to Butler, Butler hereby represents and warrants to XC as follows:
(a) Butler is aware of what constitutes an "accredited investor"
as that term is defined under Regulation D promulgated under the Securities Act
of 1933, as amended (the "Securities Act"), and under applicable state
securities laws, and Butler represents and warrants that is an "accredited
investor" for purposes of Regulation D and such state securities laws.
(b) Butler acknowledges that an investment in the Shares and the
Warrants is a speculative investment and involves a high degree of risk, and
that XC makes no assurances whatsoever concerning the present or prospective
value of the Shares. Butler is able to bear the economic risks of an investment
in the Shares, and, consequently, without limiting the generality of the
foregoing, is able to hold the Shares for an indefinite period of time and has a
sufficient net worth to sustain a loss of its entire investment in the Shares in
the event such a loss should occur.
(c) Butler is acquiring the Shares for Butler's own account for
investment and not with a view to or for resale in connection with any
distribution of the Shares. Butler has not offered or sold any portion of the
Shares and has no present intention of dividing the Shares with others or of
selling, distributing or otherwise disposing of any portion of the Shares either
currently or after the passage of a fixed or determinable period of time or upon
the occurrence or non-occurrence of any predetermined event or circumstance.
(d) Butler understands that the issuance of the Shares has not
been registered under the Securities Act and that the Shares have been issued in
reliance upon an
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exemption therefrom for non-public limited offerings. Butler acknowledges that
the Shares constitute "restricted securities" under the Securities Act and they
may not be sold, transferred, assigned, pledged or otherwise disposed of, except
pursuant to a registration statement that is declared effective under the
Securities Act, or an exemption from registration under the Securities Act as
determined by XC's legal counsel. Butler further acknowledges and agrees that XC
will place an appropriate restrictive legend on the certificate for the Shares,
as applicable, to comply with the Securities Act and to identify the Shares as
"restricted securities".
(e) Butler further acknowledges that no United States federal
agency (including, without limitation, the SEC), state agency or other similar
agency or regulatory authority of any other country, has reviewed, approved,
passed upon or made any recommendation or endorsement regarding XC or the Shares
or the Warrants.
(f) Butler acknowledges that XC is relying on the accuracy of
Butler's representations and warranties set forth this in Section 4 in issuing
the Shares to Butler.
5. (a) Butler acknowledges and agrees that neither this Agreement nor
anything contained in this Agreement constitutes an admission or acknowledgment
by the Company of any: (i) liability; (ii) violation of any federal, state or
local law, regulation, order, rule or other requirement of law, in each case,
whether domestic or foreign; (iii) breach of any contract or other agreement,
actual or implied; (iv) commission of any tort; or (v) other civil wrong of any
nature.
(b) Butler further warrants to the Company that he has received
payment of his salary and all other benefits due him under the Employment
Agreement through July 31, 2002.
6. Butler acknowledges and agrees that he understands there are
various laws and regulations prohibiting employment discrimination or otherwise
regulating employment or claims related to employment pursuant to which he may
have rights or claims. These laws and regulations include, without limitation,
the following: Title VII of the Civil Rights Act of 1964, as amended, including
the Equal Employment Opportunity Act of 1972; the Age Discrimination in
Employment Act of 1967, as amended (the "ADEA"); the Americans with Disabilities
Act of 1990; the National Labor Relations Act, as amended; the Employee
Retirement Income Security Act of 1974, as amended; the Civil Rights Act of
1991; the Worker Adjustment and Retraining Notification Act of 1988; the Family
and Medical Leave Act; 42 U.S.C. ss.1981; all federal, state and local laws
regarding human rights, employment and unemployment insurance. Butler further
acknowledges and agrees that he understands there are other statutes and laws of
contract and tort that may relate to his employment with GMBH and/or the
termination of Butler's employment with GMBH. BUTLER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES AND RELEASES ANY RIGHTS HE MAY HAVE UNDER THESE AND ANY OTHER
LAWS (IN EACH CASE AS NOW IN EFFECT AND ANY SUCCESSORS THERETO), AND UNDER LAWS
OF CONTRACT AND TORT, BUT HE DOES NOT INTEND TO WAIVE, NOR IS HE WAIVING, ANY
RIGHTS OR CLAIMS THAT MAY ARISE UNDER THE ADEA AFTER THE DATE THAT BUTLER
EXECUTES THIS AGREEMENT.
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7. In consideration of the agreements, covenants and obligations
contained herein, the parties mutually release each other as follows:
(a) Butler for himself and his heirs, estate and personal
representatives and each of their respective successors and assigns, does hereby
release and forever discharge the Company, its parent, subsidiaries, affiliates
and divisions, and each of their respective successors and assigns, and all of
their past and present directors, officers, representatives, shareholders,
agents, employees and each of their respective heirs and personal
representatives of any of them (each a "Company Released Party"), from any and
all charges, claims, actions, causes of action, suits and other proceedings and
any losses, obligations, promises, damages, judgments, demands, costs and
expenses (including, without limitation, attorneys' fees and expenses) of every
kind, nature and description, and including, without limitation, claims under
contract or tort and claims arising out of or relating to Butler's employment
with GMBH or the termination of his employment with GMBH and his rights or
Options (as hereinafter defined), whether known or unknown, suspected, disclosed
or undisclosed, claimed or concealed, from the beginning of time through the
date of the Agreement which Butler could assert against any Company Released
Party, except that nothing herein shall be construed as restricting or releasing
Butler's rights or claims that may arise by virtue of a breach of this Agreement
by the Company. If Butler violates this Agreement by filing or bringing any
charge, claim, action, suit or other proceeding against any Company Released
Party which is contrary to the release granted by this Section 7(a), or by
improperly asserting as a defense the exception set forth in the immediately
preceding sentence of this Section 7(a), in each case as determined by a court
of competent jurisdiction, then in addition to any other remedies which may be
available to any of the Company Released Parties, including, but not limited to,
remedies for breach of contract, Butler will pay all of the costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred by any
Company Released Party in defending or responding against such charge, claim,
action, suit or other proceeding brought by Butler or on Butler's behalf.
(b) In consideration of Butler's relinquishing any and all claims
against the Company Released Parties, the Company does hereby release and
forever discharge Butler and his successors, assigns, heirs, estate and personal
representatives (each, a "Butler Released Party"), from any and all charges,
claims, actions, causes of action, suits or other proceedings and any losses,
obligations, promises, damages, judgments, demands, costs and expenses
(including, without limitation, attorneys' fees and expenses) of every kind,
nature and description, and including, without limitation, claims under contract
or tort and claims arising out of or relating to Butler's employment with GMBH
or the termination of his employment with GMBH, whether known or unknown,
suspected, disclosed or undisclosed, claimed or concealed, from the beginning of
time through the date of this Agreement which the Company could assert against
any Butler Released Party, except that nothing herein shall be construed as
restricting or releasing the Company's rights or claims that may arise (i) due
any action by Butler which would constitute fraud or a breach of fiduciary duty
under applicable law while Butler was employed by GMBH or XC and (ii) by virtue
of a breach of this Agreement by Butler. If the Company violates this Agreement
by filing or bringing any charge, claim, action, suit or proceeding against any
Butler Released Party which is contrary to the release granted by this Section
7(b), or by improperly asserting as a defense the exceptions set forth in items
(i) or (ii) of this Section 7(b), in each case as determined by a court of
competent jurisdiction, then in addition to all other
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remedies which may be available to any Butler Released Party, including, but not
limited to, remedies for breach of contract, the Company will pay all of the
costs and expenses (including, without limitation, attorneys' fees and expenses)
incurred by any Butler Released Party in defending or responding to such charge,
claim, action, suit or other proceeding brought by the Company or on the
Company's behalf.
(c) Butler hereby acknowledges and agrees that as an employee of
GMBH he was in a confidential relationship with each of GMBH and XC and has had
access to Confidential Information of the Company. For purposes of this
Agreement, the term "Confidential Information" shall mean all confidential
information regarding the Company, including, but not limited to, customer
lists, vendor lists, product lists, price lists, product strategies, sales
reports, financial data and reports, marketing and sales plans, strategies and
procedures, pricing strategies, purchasing and sales strategies, operational
techniques, business plans and systems, quality control procedures and systems,
internal control procedures, accounting and reporting systems, special projects,
employee compensation, personnel and any other records, intellectual property
rights and intellectual property strategies, applications or other information
which is not in the pubic domain or is otherwise proprietary to the Company.
(d) Butler agrees that he shall not, directly or indirectly, use,
or disclose to any third party any Confidential Information. Each of Butler and
the Company agrees to use their reasonable best efforts to keep the terms and
provisions of this Agreement confidential and not to disclose such terms and
provisions to any third party, except (x) each of Butler and the Company may
make disclose of this Agreement and its terms and provisions pursuant to
applicable subpoena, law or regulation and (y) to their respective legal counsel
and accountants.
(e) Butler represents and warrants that he has returned to the
Company all equipment and other property of the Company and all documents,
materials, computer disks and other materials that are based upon any
Confidential Information or Proprietary Processes (and all copies of same) in
his possession or control (regardless of the medium in which maintained),
including, but not limited to, all documents and other materials containing
Confidential Information.
(f) For the twelve (12) month period following the Effective
Date, Butler shall not, directly or indirectly, employ or solicit to employ for
himself or others any employee of the Company or to solicit any such employee of
any of the Company to leave such employee's employment or join the employ of
another, then or at a later time, except a solicitation made by Butler for an
entity formed with XC's concurrence to engage in the business engaged in by
GMBH.
(g) It is expressly acknowledged and agreed by Butler that his
obligations set forth in this Section 7 were an inducement to the Company to
enter into this Agreement and that the scope of the provisions set forth in this
Section 7 are in each case reasonable and necessary in light of the
circumstances. If, for any reason, any aspect of any provision set forth in this
Section 7 as they apply to Butler is determined by a court of competent
jurisdiction, to be unreasonable, illegal, invalid or unenforceable, any such
provision shall, to the
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fullest extent possible, be modified by the court to the minimum extent required
by applicable law to make the provisions legal, valid and enforceable to the
fullest extent permitted by applicable law. Butler hereby acknowledges and
agrees that his services were and continue to be of a unique character and he
expressly grants the Company the right to enforce the provisions of this Section
7 through the use of all remedies available at law or in equity, including, but
not limited to, obtaining a court order, an injunction (both permanent and
temporary) or other equitable relief prohibiting Butler from threatening to
breach, breaching or continuing to breach any provision of this Section 7,
without the Company being required to post a bond or other security or prove any
amount of actual damages.
8. Any options to purchase Common Stock which were previously granted
to Butler and which are vested as of the date of this Agreement shall continue
to be exercisable for a period of six (6) months from the date of this
Agreement, regardless of any continuing provision which may be set forth in the
stock option plan under which the Options are issued.
9. (a) At the request of the Company, Butler hereby agrees to afford
GMBH such assistance in regard to the business of GMBH with respect to matters
in which he was involved during his employment with GMBH; provided that doing so
does not interfere with Butler's then current employment.
(b) Butler will not testify or give evidence in any forum or in
any action, suit or other proceeding concerning his employment or termination of
employment with GMBH or otherwise relating to the Company or its business or
activities, unless required by applicable subpoena, law or regulation or
requested to do so in writing by the Company.
10. Butler agrees not to disparage or denigrate the Company or any of
its officers or directors at any time, whether orally or in writing. The Company
agrees not to disparage or denigrate Butler at any time, whether orally or in
writing.
11. Each of the parties agrees that this Agreement shall be deemed to
have been made within the Commonwealth of Virginia, and shall be interpreted,
construed, governed by and enforced in accordance with and governed by the laws
of the Commonwealth of Virginia, without regard to its conflicts of laws
principles. Each of the parties hereby unconditionally and irrevocably consents
to the exclusive jurisdiction of the courts of the Commonwealth of Virginia
located in Fairfax County and the Federal District Court for the Eastern
District of Virginia with respect to any action, suit or any proceeding to
enforce this Agreement and waives the right to trial by jury in any such action,
suit or other proceeding. This Agreement shall be construed and interpreted
without regard to any presumption against the Company, which is the party that
caused this Agreement to be drafted.
12. Each of Butler and the Company acknowledges that this Agreement
may not affect the rights and responsibilities of the Equal Employment
Opportunity Commission (the "Commission") to enforce the ADEA, or be used to
justify interfering with the protected right of an employee to file a charge or
participate in an investigation or proceeding conducted by the Commission under
the ADEA.
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13. Butler hereby acknowledges and agrees that he was given a copy of
this Agreement, and that he has had an opportunity to and did consult an
attorney of his choosing before signing it and was given a reasonable period of
time to consider this Agreement prior to its execution by Butler. Butler further
acknowledges that in signing this Agreement, he has relied only on the promises
written in this Agreement and not on any other promise or representation made by
the Company or any of its directors or officers. This Agreement may not be
modified, amended, altered, waived or supplemented except by a written
instrument executed by each of the parties hereto.
14. This Agreement shall become effective (the "Effective Date") on
the date the earlier of (i) the date Butler releases any right to revoke this
Agreement or (ii) seven (7) days from the date Butler receives an executed copy
of this Agreement from the Company.
15. All notices, demands, consents, requests, instructions and other
communications to be given or delivered or permitted under or by reason of the
provisions of this Agreement or in connection with the transactions contemplated
hereby shall be in writing and shall be deemed to be delivered and received by
the intended recipient as follows: (a) if personally delivered, on the business
day of such delivery (as evidenced by the receipt of the personal delivery
service), (b) if mailed first class international mail, six (6) business days
after being mailed, (c) if delivered by a recognized international overnight
courier service (with all charges having been prepaid), on the business day of
such delivery (as evidenced by the receipt of the overnight courier service of
recognized standing), or (d) if delivered by facsimile transmission, on the
business day of such delivery if sent by 6:00 p.m. in the time zone of the
recipient, or if sent after that time, on the next succeeding business day (as
evidenced by the printed confirmation of delivery generated by the sending
party's telecopier machine). All such notices, demands, consents, requests,
instructions and other communications will be sent to the addresses or facsimile
numbers set forth below:
(a) if to the Company:
Xybernaut Corporation
12701 Fair Lakes Circle
Fairfax, Virginia 22033
Facsimile: 703-631-6734
Attn: H. Jan Roltsch-Anoll, Esq.
General Counsel
with a copy to:
Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention: Martin Eric Weisberg, Esq.
Facsimile: 212-704-6288
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(b) if to Butler:
Mr. Daniel J. Butler
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or to such other address as a party shall have designated by notice given to the
other party pursuant hereto.
16. This Agreement may not be amended, modified or waived, except by
an instrument in writing executed by each of the parties hereto. This Agreement
sets forth the entire understanding and agreement between the parties with
respect to its subject matter and it supersedes all prior and/or contemporaneous
understandings and agreements with respect to such subject matter (whether
written or oral) all of which are merged herein,, including, without limitation,
the Employment Agreement; provided that Section 12 of the Employment Agreement
shall remain in full force and effect. There are no promises or representations
between the parties, except for those which are expressly set forth herein.
17. This Agreement may be executed in separate counterparts, each of
which shall be an original, but all of which, when taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signature which will constitute valid and enforceable signatures for
all purposes.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
XYBERNAUT GMBH
By:
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Name:
Title:
XYBERNAUT CORPORATION
By:
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Name:
Title:
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Daniel J. Butler