EXHIBIT 10.1
 

 
ELECTRIC AQUAGENICS UNLIMITED, INC.
1464 West 40 South, Suite 200
Lindon, Utah 84042-1629

May 26, 2006

John M. Hopkins
1935 North 600 East
Orem, Utah 84097

Re: Separation Agreement

Dear John:

This is to confirm that you have agreed to voluntarily terminate your employment
relationship and your Employment Agreement with Electric Aquagenics Unlimited,
Inc. (the “Company”), effective on a future date to be determined by the
Company, which date shall be within ninety (90) days from the date of this
Agreement. The effective date on which your employment shall be terminated is
referred to herein as the “Effective Time.” As of the Effective Time, the
Employment Agreement between you and the Company will be considered terminated
and of no further force and effect. Any and all payments and other covenants
provided for in the Employment Agreement or otherwise related to your employment
by the Company will be terminated effective as of the Effective Time. This
letter contains the terms of a proposed Separation Agreement (the “Agreement”)
between you and the Company. If you accept the terms of this Agreement, you will
receive the following compensation and benefits from the Company upon your
termination:

a. The Company will pay to you the total sum of $138,000, payable as follows:
You will be paid six (6) monthly installments of $11,500 each on or before the
first day of each month, commencing on the first day of the month following the
Effective Time, and you will be paid a lump sum of $69,000 on the six (6) month
anniversary of the Effective Time. You will be solely responsible for the
payment of all taxes on these payments.

b. The Company acknowledges that you have taken a voluntary and temporary
reduction of your base salary from $11,500/month to $7,500/month. You agree that
your base salary shall remain $7,500/month from the date hereof through the
earlier of the Effective Time or June 26, 2006, after which your base salary
shall revert to $11,500/month until the Effective Time.
 

 

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John M. Hopkins
April 2, 2007
Page 2
 
c. Because of your separation from the Company, your group health insurance
coverage will expire at the end of the month in which the Effective Time falls.
You may, of course, elect COBRA continuation coverage. If you elect COBRA
coverage, the Company will pay the monthly COBRA premium to extend coverage
through the six (6) month anniversary of the Effective Time, or until you become
eligible for other group health insurance coverage, whichever comes first. You
may continue COBRA coverage after that date if you are still eligible for
coverage, but you will be solely responsible for all COBRA premiums.

d. The Company will grant to you a five (5) year option to purchase 25,000
shares of the Company’s $0.0001 par value common stock for an exercise price
equal to the closing price of the Company’s common stock on the OTC-Bulletin
Board as of the Effective Time. The option shall fully vest on the six month
anniversary of the Effective Time, provided that you have not defaulted in your
obligations under this Agreement.

e. The Company will unconditionally release you and your heirs, successors,
personal representatives, attorneys, and all persons acting on behalf of them,
from all claims, obligations, agreements, damages, losses or causes of action,
including claims arising out of your employment with the Company. This is a
general release and is intended to be very broad and to cover all claims of any
nature, whether or not the Company knows that the claims exist at this time.

f. The Company will indemnify you and hold you harmless to the fullest extent
legally permissible from and against any claim or claims made against you
because of any act or omission or neglect or breach of duty, including any
actual or alleged error or misstatement or misleading statement, which you
committed or suffered to commit while acting in your capacity as an officer or
director of the Company and solely because of your being an officer or director
of the Company. The payments which the Company will be obligated to make
hereunder shall include, inter alia, damages, judgments, settlements and costs,
cost of investigation (excluding salaries of officers or employees of the
Company) and costs of defense of legal actions, claims or proceedings and
appeals therefrom, and costs of attachment or similar bonds; provided however,
that the Company shall not be obligated to pay fines or other obligations or
fees imposed by law or otherwise which it is prohibited by applicable law from
paying as indemnity or for any other reason.

g. You will be allowed to keep the automobile previously provided to you by the
Company, provided that as of the Effective Time the Company will no longer make
payments for such automobile or the maintenance thereof.

h. You will be allowed to keep the laptop computer provided to you by the
Company, provided that you deliver to the Company a downloaded copy of the
contents of the hard drive of the laptop computer.
 
 

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John M. Hopkins
April 2, 2007
Page 3
 
i. You will be allowed to retain ownership of the office furniture and equipment
located at your home that were paid for by the Company.

j. You shall have the right to rescind or terminate this Agreement if the
Company does not ratify and approve the Exclusive License Agreement between the
Company and Zerorez Franchising Systems, Inc.

In return for the above compensation from the Company, you agree to the
following as of the Effective Time:

1.  You hereby agree to resign your employment with the Company, and your
positions as President and a Director of the Company effective as of the
Effective Time.

2.  You agree that during the course of your employment with the Company, you
came to know certain confidential and proprietary information relating to the
Company and its business operations, finances and employees. You agree that you
will not disclose or discuss any confidential information to any other person or
entity, and that you will not use any confidential information for your own
purposes. You further agree that during the period of time in which the
Exclusive License Agreement between the Company and Zerorez Franchising Systems,
Inc. remains in effect, you will not, directly or indirectly, enter into or in
any manner take part in any business, profession or other endeavor which is
competitive with the Company’s business as it is now being conducted anywhere in
the world, either as an employee, agent, independent contractor, owner or
otherwise; provided however, that your involvement with Zerorez Franchising
Systems, Inc. shall not be considered to be competitive with the Company so long
as the Zerorez Franchising Systems, Inc. does not engage in a business that is
competitive with any business that the Company is engaged in as of the date of
this Agreement. Notwithstanding the foregoing, in the event of a default by the
Company in its obligations hereunder, the non-compete covenant set forth above
shall immediately terminate.

3. You agree to return to the Company all Company documents or records that may
be in your possession, including electronic versions of such records and
documents.

4. You agree not to sign any checks drawn on the Company’s bank accounts except
as specifically requested by the Company’s Interim CEO and the Company’s CFO,
and to assist in the prompt transfer of the signature authority for all bank
accounts maintained by the Company.

5. The Company will pay the premiums on all life insurance policies insuring
your life for a period of thirty (30) days after the Effective Time. Thereafter,
you will assume the obligation to pay all premiums and other charges incident to
any such life insurance policy of which the Company is not the primary
beneficiary.
 
 

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John M. Hopkins
April 2, 2007
Page 4

6. You acknowledge and agree that the compensation and benefits outlined above
include compensation to which you are not otherwise entitled. Except as
expressly outlined above, you will not be entitled to any other compensation or
benefits from the Company.

7. You represent and agree that you have not filed any claim, complaint or
charge against the Company with any accrediting agency, governmental agency or
any state or federal court. You agree not to file any claim, complaint or charge
against the Company in the future for anything that relates in any way to your
employment with the Company or your separation from the Company. You have the
right, however, to file a claim or lawsuit for the sole purpose of enforcing
your rights under this Agreement.

8. You unconditionally release the Company, and each of its owners, affiliates,
assigns, agents, shareholders, members, directors, officers, employees,
representatives, attorneys, and all persons acting on behalf of them, from all
claims, obligations, agreements, damages, losses or causes of action, including
claims arising out of your employment with or your separation from the Company.
This is a general release and is intended to be very broad and to cover all
claims of any nature, whether or not you know that the claims exist at this
time, including but not limited to claims for wages, vacation pay, contract
claims, tort claims, and claims under any state, federal or local law. This
release specifically includes all claims that you may have under Title VII of
the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Older Workers Benefit Protection Act, the Americans with Disabilities Act,
and/or the Equal Pay Act.

9. Both parties agree to keep the terms, conditions and amounts of this
Agreement completely confidential, except to the extent disclosure is required
by applicable laws or regulations.

10. You and the Company both agree not to make or publish any written or oral
statements or remarks (including, without limitation, the repetition or
distribution of derogatory rumors, allegations, negative reports or comments)
which are or may be disparaging, deleterious or damaging to the integrity,
reputation or good will of the other. In addition, you agree not to speak poorly
of or to criticize the Company or its affiliates, including its officers,
directors, policies or practices.

11. You agree to cooperate with the Company and to assist the Company in the
transition of your duties to other employees and in defending against any claim
or legal action that may be brought against the Company that related to your
employment or to any event that occurred while you were employed by the Company.
You agree to make yourself reasonably available to the Company to answer
questions that may arise concerning work that you have performed for the Company
in the past. It is expressly understood and agreed that you will not be required
to incur any costs or expenses in complying with the provisions of this
paragraph.
 
 

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John M. Hopkins
April 2, 2007
Page 5
 
12. You understand and agree that the payments and benefits you are to receive
from the Company under this Agreement are conditioned on your compliance with
each and every term of this Agreement. If you violate any provision of this
Agreement, the Company shall have the right to immediately cease all payments,
and you may be required to repay all sums previously paid by the Company under
this Agreement.

13. The provisions of this Agreement are severable and, if any part of it is
found to be unenforceable, the other portions will remain fully valid and
enforceable.

14. This letter contains your entire Agreement with the Company. You have not
relied upon any representation or statement by the Company or anyone else that
is not contained within this letter.

15. By signing this agreement you acknowledge that the Company encouraged you to
consult with an attorney regarding your rights and obligations under this
Agreement, and that you have had ample opportunity to do so.

This Agreement may be signed in multiple counterparts, each of which will be an
original, and all of which together will constitute one and the same instrument.

 
Sincerely,
         
/s/ Jay S. Potter
 
Interim Chief Executive Officer

ACCEPTED AND AGREED:
 
/s/ John M. Hopkins
John M. Hopkins
 
5-26-06
Date