EXHIBIT 10.1
KNOVA SOFTWARE, INC.
SEPARATION AGREEMENT AND GENERAL RELEASE
     This Separation Agreement and General Release (this “Agreement”) is made on
this 30th day of June 2005 by and between Knova Software, Inc., a Delaware
corporation, and its parents, subsidiaries and other affiliates (collectively,
the “Company”), and Scott Schwartzman (“Employee”).
RECITALS
     Whereas, the Company and Employee previously entered into an Employment
Agreement, dated as of April 2005, governing the terms of Employee’s employment
with the Company (the “Employment Agreement”);
     Whereas, the Company and Employee previously entered into a Proprietary
Information Agreement, dated as of _______ (the “Confidentiality Agreement”),
regarding certain obligations of Employee to the Company in connection with
Employee’s employment with the Company;
     Whereas, the Company and Employee previously entered into those Stock
Option Agreements listed on Exhibit A hereto (collectively, the “Option
Agreements”), governing the terms of option grants for the purchase of up to an
aggregate of 132,499 shares of the Company’s Common Stock (collectively, the
“Options”);
     Whereas, the parties hereto desire to terminate Employee’s employment with
the Company and desire to set forth the terms and conditions of such termination
as may be provided in the Agreements or as otherwise set forth herein.
AGREEMENT
     In consideration of the mutual premises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to
this Agreement agree as follows:
     1. Position. Employee presently serves as the Chief Operating Officer of
the Company and, until his resignation on June 23, 2005 from such position, he
served as the Chief Financial Officer of the Company. Employee desires to reach
a full and final settlement and resolution of all past, present and future
claims, controversies and disputes that he has or may have against the Company
and/or any person related in any way to his employment with the Company and/or
its present and former stockholders, directors, officers or employees.
     2. Termination Date. Employee’s last date of employment with the Company
will be June 30, 2005 (the “Termination Date”). On the Termination Date, the
Company shall pay to Employee all earned but unpaid salary. The Company will
also provide to Employee full

 

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information regarding his rights to health insurance continuation and retirement
benefits and will provide reasonable assistance to Employee in preserving or
obtaining such rights. Effective as of the Termination Date, Employee shall
resign as an employee and each and every officer position he holds in the
Company or any of its subsidiaries.
     3. Severance Benefits. In consideration of this Agreement, the Company
agrees to:
          (a) Cash Severance Payment. Pay Employee in one lump sum payment the
sum of $146,250, which is equivalent to nine months of current base compensation
(the “Severance Payment”). The Severance Payment will be made within three
business days following the Revocation Period (as defined in Section 10(k)
below) provided that Employee has not revoked this Agreement in accordance with
Section 10(k) below.
          (b) Options. The Company will accelerate vesting for that number of
Employee’s unvested options by an amount equal to the number of option shares
that would have vested from the date hereof through the one year anniversary of
the date hereof pursuant to the terms of the Option Agreements had Employee’s
employment not been terminated. In addition, the Company hereby agrees to extent
the period within which Employee may exercise the vested portion of his Options
(including the option shares being accelerated hereunder) until the one year
anniversary of the Effective Date.
          (c) COBRA Benefits. In the event Employee elects to continue his
health insurance coverage under the Consolidated Omnibus Budget Reconciliation
Act (“COBRA”), pay the cost of COBRA benefits until (i) the date which is nine
months after the Termination Date, or (iii) at such time as Employee procures
alternative insurance reasonably comparable to the COBRA benefits either through
new employment arrangements or otherwise.
     4. Consulting.
          (a) Employee Obligations. In consideration of this Agreement, Employee
agrees to make himself available for up to ten hours per week to the Company on
a consulting basis for the period commencing after the Termination Date through
and until August 31, 2005 (the “Consulting Termination Date”).
          (b) Consideration. Employee shall not receive any additional
consideration for consulting services performed pursuant to Section 4(a) above
other than as set forth in Section 3(b) above.
          (c) Termination. The consulting services provided for in this Section
shall terminate on the earliest to occur of the following and Employee shall
have no further obligations to provide such services: (i) the Consulting
Termination Date, (ii) at such time as the Company determines, at its
convenience, that such services are no longer necessary, (iii) a merger or sale
of the Company or a transaction or series of transactions immediately after the
consummation of which the existing stockholders of the Company do not own at
least 50% of the voting stock of the Company, (iv) the liquidation, dissolution
or winding up of the Company or (v) the filing by the Company for protection
under the bankruptcy laws of the United States.

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     5. Release.
          (a) Release by Employee. In consideration of this Agreement, Employee
hereby releases, acquits and forever discharges the Company, its parents,
subsidiaries and affiliates, and its and their respective officers, directors,
agents, servants, employees, shareholders, successors, assigns and affiliates,
of and from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys fees, damages, indemnities and obligations of every kind and
nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed (other than any claim for indemnification
Employee may have as a result of any action against him based on his employment
with the Company, or as otherwise provided in applicable insurance policies or
other agreements) arising out of or in any way related to events, acts or
conduct occurring on or prior to the date Employee executes this Agreement,
arising out of or in any way connected with this Agreement, Employee’s
employment with the Company or the termination of that employment, including but
not limited to, claims of intentional and negligent infliction of emotional
distress, claims or demands related to salary, bonuses, commissions, stock,
stock options, or any other ownership interests in the Company, vacation pay,
fringe benefits, expense reimbursements, severance pay, or any other form of
compensation; claims pursuant to any federal, state or local law or cause of
action including, but not limited to, the federal Civil Rights Act of 1964, as
amended; the federal Age Discrimination in Employment Act of 1967, as amended
(“ADEA”); the federal Americans with Disabilities Act of 1990; New Jersey’s Law
Against Discrimination; tort law; contract law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the implied
covenant of good faith and fair dealing.
     Employee acknowledges that he may request the information required by the
Older Workers Benefit Protection Act. Employee also acknowledges that the
release of claims under the ADEA is subject to special waiver protection.
Therefore, in accordance with that section, Employee specifically agrees that he
knowingly and voluntarily releases and waives any rights or claims of
discrimination under the ADEA. In particular, Employee represents and
acknowledges that he understands the following: (a) Employee is not waiving
rights or claims for age discrimination under the ADEA that may arise after the
date he signs this Agreement; and (b) Employee is waiving rights or claims for
age discrimination under the ADEA in exchange for the payments described herein.
          (b) Release by the Company. In consideration of this Agreement, the
Company, on its behalf and its officers, directors, successors, assigns and
affiliates, hereby releases, acquits, and forever discharges Employee from any
and all claims, liabilities, demands, causes of action, costs, expenses,
attorneys fees, damages, indemnities and obligations of every kind and nature,
in law, equity, or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed, arising out of or in any way related to agreements,
events, acts or conduct at any time within the course and scope of Employee’s
employment with the Company.
          (c) California Civil Code. Although the Employee and Company
acknowledge and agree that this Agreement shall be governed by New Jersey law in
accordance with Section 10(b) below, if for any reason this Agreement is deemed
to be governed by

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California law, then Employee and the Company each acknowledge that it has read
and understands the language of Section 1542 of the California Civil Code, which
provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS/HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH THE
DEBTOR.”
     If applicable, Employee and the Company each expressly waive and relinquish
all benefits, rights and protection under § 1542 and any law of any jurisdiction
of similar effect with respect to the release of any claims that Employee or the
Company may have against the other party. Employee and the Company understand
and agree that claims or facts in addition to or different from those which are
now known or believed by him or it to exist may hereafter be discovered, but it
is Employee’s and the Company’s intention to settle fully and release all of the
claims either party may have against each other, whether known, unknown or
suspected.
     6. Representations and Warranties by Employee.
          (a) Compensation. Employee represents and warrants that amounts paid
under Section 2 above constitute the full amount of earned but unpaid salary and
all accrued vacation and PTO time, each as of the Termination Date.
          (b) Workers’ Compensation. Employee represents and warrants that he
has not and will not file or pursue a claim for Workers’ Compensation benefits
arising out of his employment with the Company, and that he has not suffered an
injury in the course and scope of his employment with the Company.
          (c) Assignment; Indemnification by Employee. Employee represents and
warrants that he has not assigned, transferred or conveyed to any person or
entity any claim, demand, liability or obligation or cause of action released by
this Agreement. Employee agrees to indemnify, defend and hold harmless the
Company, and/or any present or former director, officer or employee of the
Company from any claims which may be asserted against them based on, or arising
out of, any such assignment, transfer or conveyance.
     7. Covenants.
          (a) Transition. Employee agrees to render all necessary and reasonable
cooperation to the Company to transfer his duties and responsibilities as may be
directed by the Company.
          (b) Statements. Employee agrees that he will make no disparaging
comments whatsoever about the Company, its present or former directors,
officers, employees or affiliated entities. The Company agrees that its officers
and directors will make no disparaging comments about Employee.

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          (c) Publicity. Notwithstanding the restrictions set forth in the
Confidentiality Agreement, Employee shall not, unless required by compulsory
legal process, disclose to any person (or encourage or cause any third-party to
disclose) in any forum or medium (including, but not limited to, television,
radio, newspaper, magazine, Internet website, electronic bulletin board,
electronic chat room or e-mail) the terms of this Agreement, the benefit being
paid under it or the fact of its payment, except that Employee may disclose this
information to his spouse, as well as his attorneys, accountants or other
professional advisors to whom he must make disclosure in order for them to
render professional services to him. In all cases, however, Employee will
instruct them to maintain the confidentiality of this information.
          (d) Covenant Not to Sue. The parties hereto agree not to initiate or
cause to be initiated against any of the parties released under Section 5 above,
any lawsuit, compliance review, administrative claim, investigation or
proceedings of any kind which pertain in any manner to the claims released in
Section 5 above.
     8. Confidentiality Agreement. Parties hereto agree that the terms and
conditions of the Confidentiality Agreement not otherwise inconsistent with the
terms set forth herein shall remain in full force and effect.
     9. Termination. Unless Employee has breached the terms of any
representation or warranty made by Employee contained herein or except as set
forth herein, the Company shall not have the right to terminate this Agreement
prior to the satisfaction of its obligations hereunder.
     10. Miscellaneous.
          (a) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the heirs, estate, representatives, successors and
assigns of each of the parties hereto.
          (b) Governing Law. This Agreement shall in all respects be
interpreted, enforced and governed by and under the laws of the State of New
Jersey, excluding conflicts of law principles thereof.
          (c) Counterparts. This Agreement may be executed in counterparts, and
by facsimile, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
          (d) Interpretation. In interpreting the language of this Agreement,
both parties to this Agreement shall be treated as having drafted this Agreement
after meaningful negotiations.
          (e) Amendments. This Agreement may be modified only in writing signed
by both parties hereto.

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          (f) Severability. If any provision of this Agreement is held to be
invalid, void, or unenforceable, the remaining provisions shall remain in full
force and effect.
          (g) Arbitration. Any dispute or controversy arising out of or relating
to the construction or application of any terms, covenants or conditions of this
Agreement or any claimed breach hereof (other than as set forth herein) shall be
settled, at the request of either party, by an arbitration proceeding conducted
in accordance with the rules of the American Arbitration Association (“AAA”),
with the award determined to be appropriate by the arbitrator therein to be
final, non-appealable and binding on the parties hereto, and with judgment upon
such award as is rendered in any such arbitration proceeding available for entry
and enforcement in any court having jurisdiction over the parties hereto. The
arbitrator shall be an impartial arbitrator qualified to serve in accordance
with the rules of the AAA and shall be reasonably acceptable to each of the
Company and Employee. If no such acceptable arbitrator is so appointed within
15 days after the initial request for arbitration of such disputed matter, each
of the parties hereto shall promptly designate a person qualified to serve as an
arbitrator in accordance with the rules of the AAA, and the two persons so
designated shall promptly select the arbitrator from among those persons
qualified to serve in accordance with the rules of the AAA. The arbitration
shall be held in either Mercer County, New Jersey or in such other place as may
be agreed upon at the time by the parties hereto. The expenses of the
arbitration proceeding shall be borne equally by the Company and Employee. In
the event of breaches of confidentiality obligations by Employee under this
Agreement or the Agreements, the Company may seek any and all legal and
equitable remedies, including without limitation injunctive relief.
          (h) Attorneys’ Fees. If there is any dispute over the terms or
obligations under this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys’ fees and costs incurred to enforce or defend this
Agreement in any proceeding in which it prevails.
          (i) Entire Agreement. Unless otherwise provided herein, this Agreement
is the entire agreement of the parties hereto pertaining to the subject matter
hereof and supersedes any prior or contemporaneous negotiations or agreements
between the parties hereto, whether written or oral. Unless otherwise provided
herein, all prior offer letters, agreements or understandings between the
Company and Employee relating to his employment with the Company are hereby
terminated and shall be of no further force and effect. Each of the parties
hereto acknowledges either representation by counsel throughout all negotiations
which preceded the execution of this Agreement, or the opportunity to have this
Agreement reviewed by counsel prior to the execution of this Agreement. Each of
the parties hereto acknowledges that it has not relied on any promise,
representation or warranty, expressed or implied, not contained in this
Agreement.
          (j) ACKNOWLEDGEMENT. EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS
ENTIRE AGREEMENT, THAT HE HAS HAD OPPORTUNITY TO CONSULT COUNSEL TO EXPLAIN THIS
AGREEMENT TO HIM, AND THAT HE UNDERSTANDS THIS AGREEMENT AND EACH OF THE
PROVISIONS CONTAINED HEREIN. EMPLOYEE FURTHER ACKNOWLEDGES THAT NEITHER THIS
AGREEMENT, NOR PAYMENT OF ANY CONSIDERATION PURSUANT TO THIS AGREEMENT, SHALL BE
TAKEN OR CONSTRUED TO BE AN ADMISSION OR

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CONCESSION OF ANY KIND WITH RESPECT TO LIABILITY OR ALLEGED WRONGDOING BY THE
COMPANY. TO THE CONTRARY, THE COMPANY ASSERTS THAT ALL ACTIONS TAKEN WITH REGARD
TO EMPLOYEE WERE PROPER AND LAWFUL AND AFFIRMATIVELY DENIES ANY WRONGDOING OF
ANY KIND. EMPLOYEE ACKNOWLEDGES THAT THE COMPANY DENIES ANY WRONGDOING OR
LIABILITY RELATED TO HIM.
          (k) Enforceability. Employee has been informed by the Company and
acknowledges and understands that he has been given up to 45 days to consider
the terms of this Agreement (although he need not take the full 45 days to do
so), that he may seek advice from an attorney, and that he may revoke this
Agreement at any time within seven (7) days following the date of his execution
of this Agreement (the “Revocation Period”). Any revocation within the
Revocation Period must be submitted in writing to the CEO of the Company at
10201 Torre Avenue, Suite 350, Cupertino, CA 95014, and must state “I hereby
revoke my acceptance of the Separation Agreement and General Release.” Other
than with respect to Section 2 above, no payment will be made at any time prior
to the eighth day following Employee’s execution of this Agreement. In the event
that Employee revokes this Agreement within the Revocation Period, this
Agreement shall be deemed null and void with no further force and effect.
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     The parties hereto have executed this Separation Agreement and General
Release as of the dates set forth below.

              COMPANY:
 
            KNOVA SOFTWARE, INC.
 
       
 
  By:    
 
                Bruce Armstrong         Chief Executive Officer
 
            Dated:
 
       
 
            EMPLOYEE:
 
                  Scott Schwartzman
 
            Dated:
 
       

SIGNATURE PAGE TO SEPARATION AGREEMENT AND GENERAL RELEASE

 

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EXHIBIT A
SCHEDULE OF OPTIONS