bpo_8k-ex1001.htm


    
      Exhibit
10.1



     

    EMPLOYMENT SEPARATION
AGREEMENT

     

    This EMPLOYMENT SEPARATION AGREEMENT
(this “Agreement”) is made by and between BPO Management Services, Inc., a
Pennsylvania corporation (the “Company”), BPOMS, Inc., a Delaware corporation,
f/k/a BPO Management Services, Inc.,  and an indirect wholly owned
subsidiary of the Company (“Former BPOMS”), and Donald W. Rutherford
(“Rutherford”), as of the 6th day of
May, 2009.

    


    WHEREAS, Former BPOMS and Rutherford
are parties to that certain letter agreement dated as of January 26, 2007 (the
“Employment Agreement”), which sets forth, among other things, the terms and
conditions pursuant to which Rutherford was employed by Former BPOMS and
currently serves as Chief Financial Officer of the Company and setting forth the
amount of certain payments that would be made to Rutherford upon termination of
his employment in certain circumstances;

    


    WHEREAS, Former BPOMS, the Company and
Rutherford have mutually agreed to terminate the Employment Agreement and
Rutherford’s employment with Former BPOMS and the Company on the terms provided
in this Agreement.

    


    NOW, THEREFORE, for and in
consideration of the mutual covenants and agreements contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Former BPOMS, the Company and Rutherford do hereby
agree as follows:

    


    1.           Termination of Employment
Agreement and Rutherford’s Employment.  Former BPOMS, the
Company and Rutherford hereby acknowledge the existence of the Employment
Agreement, and the terms thereof, which are incorporated herein by this
reference, are modified in the following particulars only, and this Agreement
shall hereafter govern the relative rights, duties and obligations of the
parties.  In addition, effective as of close of business on May 15,
2009 (the “Termination Date”), Rutherford’s employment with Former BPOMS and as
the Chief Financial Officer of the Company are hereby terminated by mutual
agreement.    From the date of execution of this Agreement
through the Termination Date, Rutherford shall continue to perform his normal
duties as Chief Financial Officer of the Company, including completion and
certification of the Form 10-Q for the period ending March 31,
2009.  Following the Termination Date, Rutherford will cooperate with
the Company regarding outstanding business issues to the extent reasonably
requested by the Company and agreed upon by the parties.

     


    
      
        
          


          EMPLOYMENT SEPARATION
AGREEMENT – Page 1

        

         


      

      
         


        
          

        

      

      
         


      

    


    2.           Severance and Other
Post-Termination Payments and Rights.  Rutherford will receive
his normal base salary through the Termination Date, and any accrued but unused
vacation pay per the standard vacation policy.  In addition,
Rutherford will be entitled to receive the following additional post-termination
payments and benefits:

     

    (a)           Severance
Pay.  Rutherford will be paid a total of $83,333.50 plus
interest on the unpaid balance thereof calculated at 10% per annum in severance
(the “Total Severance Amount”) payable over twelve (12) months in equal
installments on the normal payroll cycle beginning with the first payroll
following the Termination Date. These severance payments will be subject to
normal tax withholding.  In the event the Company successfully
completes a capital raise, merger or sale of assets that results in net receipts
of at least $2,000,000 during this period, then the payment of the entire
remaining unpaid balance of the Total Severance Amount shall be accelerated and
paid on the next scheduled payroll cycle following the closing of the funding
transaction; Any payment not made when due shall be immediately subject to a
late charge in the sum of 1 1⁄2% per month or any part thereof until paid. If two
or more payments in succession are not made when due, Rutherford shall have the
option to accelerate the entire balance due plus all penalties and interest and
immediately exercise all of his rights under this agreement, as set forth in
paragraph 3 below. Upon any default as described above, Rutherford shall be
entitled to any and all reasonable attorney’s fees and costs incurred in
exercising his rights hereunder.

     

    (b)           Benefits.  All
benefits will terminate in accordance with standard policies and practices as of
the Termination Date.  For example, the medical insurance
reimbursement will end on the Termination Date and any matching contributions in
the 401(k) plan will not be made on severance payments.

    


    (c)           Extension of
Post-Termination Exercise Rights on Stock Options.  Rutherford
currently holds 98,680 options to purchase Company common stock issued pursuant
to the BPO Management Services, Inc. 2003 Stock Option Plan with an exercise
price of $4.662 per share, and 172,690 options to purchase Company common stock
issued pursuant to the BPO Management Services, Inc. 2007 Stock Option Plan with
an exercise price of $0.162 per share.  These options have previously
fully vested.  The Company hereby agrees that these options shall
remain outstanding according to the original terms and shall be exercisable for
a period of twenty-four (24) months after the Termination Date, subject to the
terms of the applicable option plan.

     


    
      
        
          


          EMPLOYMENT SEPARATION
AGREEMENT – Page 2

        

         


      

      
         


        
          

        

      

      
         


      

    


    (d)           Lap Top Computer and Cell
Phone.  The Company lap top computer used by Rutherford shall
be retained by Rutherford and may be utilized to provide the cooperation and
assistance contemplated in Section 1 above regarding post-termination business
issues.

    


    3.           Security.  In
order to secure payment of the of Total Severance Amount outstanding from time
to time, Rutherford is hereby granted a security interest in and to the United
States assets of Former BPOMS.  Rutherford acknowledges that other
assets of the Company that are not held at or below the Former BPOMS subsidiary
level are also expressly excluded, including all assets of Healthaxis.com, Inc.
and its downstream subsidiaries including Healthaxis, Ltd. and Healthaxis
Imaging Services, LLC and their respective assets and
subsidiaries.  In order to perfect this security interest, Former
BPOMS will execute and deliver to Rutherford a UUC-1 Financing Statement upon
full execution of this Agreement which Rutherford may file in the appropriate
records in Delaware and California, at Rutherford’s expense.  In the
event of a default by the Company and Former BPOMS in payment of the severance
installments pursuant to Subsection 2(a) above, and following ten (10) days
written notice from Rutherford to the Company providing an opportunity to cure,
Rutherford may enforce his security interest in accordance with the laws of the
state of California.  Rutherford hereby agrees that this security
interest is and shall be deemed subordinate to all security interests now or
hereafter held by any of the commercial lenders who may loan money to Former
BPOMS or its subsidiaries that are covered by the security interest granted
herein, and agrees to cooperate with the Company and Former BPOMS in executing
any subordination agreements, acknowledgements, waivers or other documents that
may be reasonably requested from time to time by any lenders as may be necessary
for the Company or any of its subsidiaries to receive or maintain credit from
any lender making such request.  Upon payment in full of the Total
Severance Amount, Rutherford shall immediately deliver a UCC-3 in order to fully
release and discharge the security interest granted herein, for the Company to
record as deemed appropriate at their expense.

    


    4.           Non-Solicitation. In
consideration of the Company’s obligations and payments to be made under Section
2(a) above, Rutherford hereby agrees that during the twenty-four (24) month
period following the Termination Date, he shall not (i) directly or
indirectly solicit or attempt to solicit any of the employees, agents,
independent contractors, or representatives Former BPOMS or the Company or its
other affiliates to leave any of such entities; or (ii) directly or indirectly
solicit or attempt to solicit any of the employees, agents, independent
contractors or representatives of Former BPOMS or the Company or its other
affiliates to become employees, agents, representatives or independent
contractors of any other person or entity.

     


    
      
        
          


          EMPLOYMENT SEPARATION
AGREEMENT – Page 3

        

         


      

      
         


        
          

        

      

      
         


      

    


    5.           Protection of Confidential
Information; Non-Disparagement.  Rutherford shall hold in a
fiduciary capacity for the benefit of the Company all confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which was obtained by Rutherford during his
employment by Former BPOMS and the Company.  Rutherford agrees that he
will not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it, or otherwise use or exploit such information on behalf of
himself or any third party.  Rutherford and the Company agree that
each will not make any public or private statements, comments, or communications
about each other, including the Company or its officers, directors or employees,
that could constitute disparagement or that may be considered to be derogatory
or detrimental to the good name or business reputation of Rutherford or the
Company or such officers, directors or employees.  Notwithstanding
anything herein to the apparent contrary, the parties hereto acknowledge and
agree that this Agreement will be described in, and filed with, a Form
8-K.

     

    6.           Mutual
Release.  In consideration of the covenants and agreements
contained herein, including the Company’s obligations and payments to be made
under Subsection 2(a) above, Rutherford on behalf of himself, and his respective
heirs, executors, administrators, affiliates, successors and assigns, hereby
releases, acquits, and forever releases and discharges Former BPOMS and the
Company and each of their former and present agents, directors, officers,
stockholders, employees, servants, parent, affiliates, owners, subsidiaries,
divisions, successors, predecessors and assigns (all such entities and
individuals hereinafter collectively referred to as the “Released Parties”) of
and from any and all claims, actions, causes of action, demands, rights,
damages, debts, compensation, costs, or other expenses, including without
limitation attorneys’ fees, of any nature whatsoever, whether known or unknown,
which Rutherford ever had, now has, or which he, his heirs, executors,
administrators, successors and assigns hereafter can, shall or may have against
the Released Parties arising out of any matter, cause, acts, conduct, claims or
events, including but not limited to, each and every claim, demand or cause of
action which Rutherford ever had or now has arising out of the Employment
Agreement or Rutherford’s association or employment with Released Parties, as an
employee, officer, independent contractor or consultant, or the cessation
thereof, and any written or oral representations made to Rutherford thereby, and
any federal, state, or local statute, rule, regulation or principle of common
law, including, but not limited to, any claims under Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e et seq.; the Age
Discrimination in Employment Act (and Older Worker Benefits Protection Act), as
amended, 29 U.S.C. §§ 621 et seq.; the Americans with Disabilities Act, 42
U.S.C. §§ 12101 et seq.; the Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. §§ 1001 et seq.; or under any other federal, state or local
statute, rule or regulation or principle of employment or contract
law.

     


    
      
        
          


          EMPLOYMENT SEPARATION
AGREEMENT – Page 4

        

         


      

      
         


        
          

        

      

      
         


      

    


    In
consideration of the covenants and agreements contained herein, the Company on
behalf of itself and all its affiliates constituting the Released Parties, and
their successors and assigns, hereby releases, acquits, and forever releases and
discharges Rutherford of and from any and all claims, actions, causes of action,
demands, rights, damages, debts, compensation, costs, or other expenses,
including without limitation attorneys’ fees, of any nature whatsoever, whether
known or unknown, which any such parties ever had, now has, or which they or
their successors and assigns hereafter can, shall or may have against Rutherford
arising out of any matter, cause, acts, conduct, claims or events, including but
not limited to, each and every claim, demand or cause of action which they ever
had or now has arising out of the Employment Agreement or Rutherford’s
association or employment with Released Parties, as an employee, officer,
independent contractor or consultant, or the cessation thereof, and any written
or oral representations made to them by Rutherford, and any federal, state, or
local statute, rule, regulation or principle of common law or regulation or
principle of employment or contract law.

     

    Nothing
contained in this Section 6 shall release, acquit, or discharge any claims,
actions, causes of action, demands, rights, damages, debts, compensation, costs,
or other expenses, including without limitation, attorneys’ fees, arising out of
or relating the obligations contained in this Agreement or the enforcement
thereof.

     

    7.           Successors.  This
Agreement is personal to Rutherford and without the prior written consent of the
Company shall not be assignable by Rutherford otherwise than by will or the laws
of descent and distribution.  This Agreement shall inure to the
benefit of and be enforceable by Rutherford's legal
representatives.  This Agreement shall inure to the benefit of and be
binding upon Former BPOMS and the Company and their respective successors and
assigns.  The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and/or Former
BPOMS to assume expressly and agree to perform this Agreement in the same manner
and to the same extent that the Company and Former BPOMS would be required to
perform it if no such succession had taken place.  

     


    
      
        
          


          EMPLOYMENT SEPARATION
AGREEMENT – Page 5

        

         


      

      
         


        
          

        

      

      
         


      

    


    8.           Miscellaneous.

     

    (a)           Applicable
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without reference to
principles of conflict of laws.  The captions of this Agreement are
not part of the provisions hereof and shall have no force or
effect.  This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

     

    (b)           Notices.  All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

     

    
      If to
Rutherford:

    

    


    Donald W.
Rutherford

    21775
Tahoe Lane

    Lake
Forest, CA 92630

    


    If to Former BPOMS and the
Company:

    


    
      BPO
Management Services, Inc.

    

    
      1290
North Hancock Street, Suite 200

    

    
      Anaheim
Hills, California 92807

    

    
      Attention:  Jim
Cortens, President

    

    


    
      With Copy
to:

    

    


    
      BPO
Management Services, Inc.

    

    
      7301 N.
State Highway 161, Suite 300

    

    
      Irving,
Texas  75039

    

    
      Attention:  J.
Brent Webb, General Counsel

    

    


    or to
such other address as either party shall have furnished to the other in writing
in accordance herewith.  Notice and communications shall be effective
when actually received by the addressee.

    


    (c)           Withholding.  The
Company may withhold from any amounts payable under this Agreement such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.

     


    
      
        
          


          EMPLOYMENT SEPARATION
AGREEMENT – Page 6

        

         


      

      
         


        
          

        

      

      
         


      

    


    (d)           Waiver.  Any
failure to insist upon strict compliance with any provision of this Agreement or
the failure to assert any right any party may have hereunder shall not be deemed
to be a waiver of such provision or right under this Agreement, unless such
waiver is expressly made in writing signed by the party waiving its right
hereunder.

     

    (e)           Entire
Agreement.  Rutherford, Former BPOMS and the Company
acknowledge that this Agreement constitutes the entire agreement between them
and shall supersede any other agreement between the parties with respect to the
subject matter hereof,.

     

    



    
      
        
          


          EMPLOYMENT SEPARATION
AGREEMENT – Page 7

        

         


      

      
         


        
          

        

      

      
         


      

    


    


    IN
WITNESS WHEREOF, the parties are executing this Agreement to be effective as of
the day and year first above written.

    


    
      	 
      	
              RUTHERFORD:

            
	 
      	 
      
	 
      	 
      
	 
      	
              /s/Donald
      W. Rutherford

            
	 
      	
              Donald
      W. Rutherford

            
	 
      	 
      
	 
      	 
      
	 
      	
              FORMER
      BPOMS:

            
	 
      	 
      
	 
      	
              BPOMS,
      Inc.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      /s/ Jim
      Cortens

            
	 
      	
                     Jim
      Cortens

            
	 
      	
                     Its:
      President

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              COMPANY:

            
	 
      	 
      
	 
      	
              BPO
      Management Services, Inc.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      /s/ Jim
      Cortens

            
	 
      	
              Jim
      Cortens

            
	 
      	
              Its:
      President

            


    

    


    


    


     

     

     

     

     

    
      EMPLOYMENT SEPARATION
AGREEMENT – Page 8