Document:

exv10w57

 

Exhibit 10.57

March 30, 2006

HAND DELIVERED

Alison L. May

22 Jersey Street

San Francisco, CA 94114

			
	Re:	 	Separation Agreement and General Release

Dear Alison:

     This letter, upon your signature, will constitute the agreement (hereafter “Agreement”)
between you and RedEnvelope, Inc. (“Company”) on the terms of your separation from employment with
the Company.

     1. You shall resign as Chief Executive Officer and as a member of the Board of Directors of
the Company effective at the start of business on February 21, 2006 (the “Resignation Date”). Your
employment with the Company shall continue after such date until the close of business on March 31,
2006 (“Separation Date”) during which time you shall serve as a special advisor to the newly hired
Chief Executive Officer of the Company. As of the Resignation Date, you will not say or do
anything purporting to bind the Company and as of the close of business on the Separation Date, you
will no longer represent to anyone that you are still an employee of the Company. Commencing on
April 1, 2006 and continuing through June 30, 2006 (the “Consulting Period”), you shall provide
consulting services as reasonably requested by the Company during regular business hours, Monday —
Friday, on issues and projects related to strategic planning, product development and shareholder
relations. The Company shall compensate you for such consulting services through a weekly retainer
of $1,200 and at the rate of $150 an hour for each hour of service provided in excess of 8 hours in
a week. You agree that you will submit an invoice by the last day of each month for the services
rendered during such month.

     2. On the Separation Date you shall receive your final paycheck, including all salary and
other compensation due through March 31, 2006 and a check for your accrued but unused PTO and Float
Time.

     3. You agree that you shall return to the Company all Company property that is in your
possession as of the Separation Date, including, without limitation, personal computer(s), keys,
documents, files, records, data, confidential or proprietary information.

     4. In consideration for your promises and covenants in this Agreement, the Company will pay
you a severance amount of $285,000.00 (“Severance Amount”) as outlined in your Offer Letter with
the Company dated March 12, 2002. This severance amount will be paid in biweekly installments, less
applicable payroll deductions and all required withholdings, in accordance with the Company’s
regular payroll schedule, during the twelve (12) calendar months following the later of the
Separation Date and the Effective Date of this Agreement (as defined below). As additional
consideration for such promises and covenants, the Company will

 

 

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reimburse you for up to twelve (12) months of premiums to continue your and your eligible
dependents’ healthcare insurance coverage under COBRA (as defined below), should you elect to
continue such coverage. Any tax obligations which may arise out of these payments are your sole
responsibility, and you agree to indemnify and defend the Company from and against any and all
taxes, interest, penalties, claims or other liabilities of any kind arising from or related to your
failure to pay tax obligations owed by you as a result of these payments. You acknowledge and agree
that you are not otherwise entitled to the Severance Amount or any COBRA premium reimbursements
being paid to you under this Agreement.

     5. As of the Separation Date you will no longer be eligible to participate in any of the
Company’s benefits or compensation plans, except as provided by law, under the terms of the
applicable plans, or as provided in this paragraph. Your existing coverage under the Company’s
group health insurance plan (and, if applicable, the existing group health coverage of your
eligible dependents) will terminate on March 31, 2006. Prior to that date, the Company will
provide you information regarding your rights to elect continuation of this health insurance
coverage, at your own expense (except as set forth in paragraph 4), under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”), provided you make a timely election to do so. Nothing
in this Agreement will impair any rights you may have to elect continued health insurance coverage
under COBRA.

     6. All vesting of any existing grants to you of Company stock options shall cease as of the
last day of the Consulting Period. Any rights you may have to exercise any Company stock options
that have vested as of such date, and the time periods and procedures for such exercise, are
governed by the terms of: (1) any existing Notice of Stock Option Grants and Stock Option
Agreements, signed by both you and the Company (collectively “Stock Agreements”); and (2) the
Company’s 1999 Stock Plan (“Stock Plan”). Nothing in this Separation Agreement will affect any
existing, vested rights you may have under the Stock Agreements or Stock Plan. All vested shares
not exercised by the end of the period specified in your Stock Agreements will be forfeited. All
unvested shares will expire as of the last day of the Consulting Period. You acknowledge and agree
that any incentive stock options that you hold will retain their status as incentive stock options
for tax purposes until the date that is three (3) months after the Separation Date, after which
they will be treated for tax purposes as nonstatutory stock options, subject to ordinary income
realization and required tax withholding at the time of exercise.

     7. Except as otherwise provided in this Agreement, on behalf of yourself and your
representatives, agents, heirs and assigns, you waive, release, discharge and promise never to
assert any and all claims, liabilities or obligations of every kind and nature (hereinafter,
“Claims”), whether known or unknown, suspected or unsuspected, claimed or unclaimed, that you ever
had, now have or might have as of the date you sign this Agreement against the Company and/or any
of its past or present officers, directors, employees, shareholders, parents, subsidiaries,
affiliates, representatives, attorneys, fiduciaries, predecessors, successors, agents or assigns
(collectively “Released Parties”). The released Claims include, without limitation, any claims
arising from or related in any way to your hiring, employment, compensation or separation from
employment with the Company, any Company benefits or benefit plans, and/or the execution of this
Agreement. The released Claims also specifically include, without limitation, any Claims arising
under any federal, state and local statutory or common law, such as Title VII of the Civil Rights
Act, the Age Discrimination in Employment Act of 1967, the Family and Medical Leave Act, the
California Fair Employment and Housing Act, the California

 

 

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Family Rights Act, the Americans With Disabilities Act, the Employee Retirement Income
Security Act, the Fair Labor Standards Act, the California Labor Code (including section 132a
claims), the California Government Code (all as amended), the law of contract and tort, and any
Claim for recovery of costs and/or attorney’s fees. The released Claims will not include any
Claims for:

     (a) state unemployment insurance,

     (b) disability benefits,

     (c) workers’ compensation benefits,

     (d) benefit entitlements vested as of the Separation Date under any benefit plans maintained
by the Company for its officers or employees, and

     (e) indemnity for your actions as an officer and employee of the Company, to the full extent
permitted by the Company’s by-laws, by the Indemnification Agreement entered into between you and
the Company, and by the provisions of California law.

     8. You understand that, as provided under the Age Discrimination in Employment Act of 1967,
you have twenty-one (21) days after receipt of this Agreement within which you may review and
consider, discuss with an attorney of your own choosing, and decide to execute or not execute it.
You also understand that for a period of seven (7) days after you sign this Agreement, you may
revoke this Agreement and that the Agreement will not become effective until seven (7) days after
you sign it, and only then if you do not revoke it (the “Effective Date”). In order to revoke this
Agreement, you must deliver to the [Chief Executive Officer] of the Company, by no later than seven
(7) days after you execute this Agreement, a letter stating that you are revoking it.

     9. You also waive, release, discharge and promise never to assert any and all claims against
any of the Released Parties, even if you do not now know or believe that you have any such claims.
You therefore expressly waive the protection of California Civil Code section 1542, which provides
that:

A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of
executing the release, which if known to him or her must have
materially affected his or her settlement with the debtor.

     In short, you agree that you will not initiate any lawsuits, administrative proceedings or
legal actions of any kind against the Company or any of the other Released Parties, except to
enforce any provision of this Agreement, and will not accept the benefits of any lawsuits or claims
of any kind brought on your behalf against the Company or any of the other Released Parties, except
to enforce any provision of this Agreement.

     10. Unless required by court order or lawfully issued subpoena, until such time as the terms
of this Agreement are publicly disclosed by the Company in accordance with applicable securities
laws, you will keep the terms of this Agreement strictly confidential and will not disclose to
anyone, without the prior written permission of the Chief Executive Officer

 

 

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of the Company, any information regarding the terms of this Agreement, the benefits provided
to you under it, or the fact that a payment was made to you; provided, however, that you may
disclose this information to your spouse or domestic partner, and to your attorneys, accountants or
other professional advisors as necessary for them to render professional services to you. Before
making any disclosure to any person(s) permitted under this paragraph you will advise such
person(s) of this confidentiality provision and require them to comply with it to the same extent
as you must.

     11. All applicable terms of the Confidential Information and Invention Assignment Agreement
that you signed with the Company on April 8, 2002 (“Confidentiality Agreement”) will remain in full
force and effect. A copy of the Confidentiality Agreement is attached hereto as Exhibit A and
incorporated herein by reference.

     12. In the event that you breach any of your obligations to Company under this Agreement
(including Exhibit A), the Company will be entitled to immediately terminate your employment or
consulting arrangement (as described above) with no further obligation or liability to you and/or
immediate return of any and all benefits provided to you under this Agreement and to obtain
injunctive and all other available relief provided at law or equity. All other duties and
obligations under the Agreement, however, including your waivers and releases, shall remain in full
force and effect.

     13. Except as specified below, to the fullest extent allowed by law, any and all disputes,
claims or controversies of any kind arising out of or related in any way to the interpretation or
enforcement of this Agreement, or any other matter (including any statutory or common law claims
against the Company or any of the other Released Parties) shall be fully and finally resolved
through binding arbitration, before a neutral arbitrator, in San Francisco, California, in
accordance with the then existing national rules of the American Arbitration Association for the
resolution of employment disputes, as modified in any respect necessary to comply with the
requirements of California law for enforcement of arbitration agreements regarding such disputes.
You and the Company therefore specifically waive any right to a jury trial on any such disputes,
claims or controversies. The Company shall pay for the costs of the arbitration, including all
arbitrator fees. Except as may be inconsistent with applicable law, the prevailing party in any
arbitration shall be entitled to an award of its costs (excluding AAA administrative and arbitrator
fees) and reasonable attorneys fees, in addition to any other relief to which it is entitled. This
arbitration provision shall not apply to any claims for injunctive or other similar equitable
relief.

     14. This Agreement will in all respects be interpreted, enforced and governed under the laws
of the State of California, without regard to the conflicts of laws rules thereof. In interpreting
the language of this Separation Agreement, both parties shall be treated as having drafted the
Agreement after meaningful negotiations. If any provision of this Agreement is held to be invalid,
void or unenforceable, the remaining provisions shall remain in full force and effect to the
fullest extent permitted by law. This Agreement will inure to the benefit of and be binding upon
the heirs, representatives, successors and assigns of each of the parties.

     15. You expressly acknowledge and agree that, if requested to do so by the Company, you shall
sign a Continuing Representations Certificate, in the form provided by the Company, on the
Separation Date and/or the last day of the Consulting Period, reaffirming each of the waivers,
releases, warranties and representations contained in this Agreement as of such

 

 

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date and that your rights continue to be as defined by the terms of this Agreement as of such
date.

     16. This Agreement (including any exhibits) and the Indemnification Agreement you executed
with the Company, a copy of which is attached hereto as Exhibit B and incorporated herein by
reference, which shall remain in effect following the Separation Date in accordance with its terms
constitute the entire agreement between the parties as to matters discussed herein and supersedes
any prior or contemporaneous negotiations, representations, promises, agreements, and/or
understandings of the parties with respect to such matters, whether written or oral, except as
specifically set forth in this Agreement. The parties acknowledge that they have not relied on any
promise, representation or warranty, expressed or implied, not contained in this Agreement. This
Agreement may only be modified, or any specific requirements waived, in a writing signed by you and
the Chief Executive Officer of the Company.

To accept the Agreement, please date and sign this letter and return it to me.

The Company wishes you success in your future endeavors.

	 	 	 	 	 
	 	RedEnvelope

 	 
	 	/s/  Ken Constable
 	 
	 	 	 
	 
	 
	 	Name Ken Constable

Title President & CEO 	 
	 

Exhibit A — Confidential Information and Invention Assignment Agreement

Exhibit B — Indemnification Agreement

AGREED:

By signing this letter, I acknowledge that I have read and had the opportunity to carefully review
and consider this Separation Agreement (with an attorney of my choice if so desired); that I fully
understand all of the terms in the Separation Agreement (and in the attached exhibit); that I am
competent to enter into this Agreement; and that I voluntarily agree to each of the terms set forth
above.

	 	 	 	 	 
	 	 	 
	Date:  March 30, 2006	     /s/ Alison May
 	 
	 	Alison L. Mayexv10w58

 

EXHIBIT 10.58

RedEnvelope, Inc.

ANNUAL BONUS PLAN

I. INTRODUCTION

	 	A.	 	THE OBJECTIVE OF THE ANNUAL INCENTIVE PLAN is to financially
reward employees for their contributions to the success and
profitability of RedEnvelope, Inc.
	 
	 	B.	 	PARTICIPANTS: This plan applies to RedEnvelope, Inc. full-time
and part-time employees who 1.) began work on or before the
first day of the Company’s fourth fiscal quarter, 2.) are
employed on the day bonuses are paid, and 3.) are not enrolled
in any other bonus, sales, or incentive plan.
	 
	 	C.	 	CHANGES IN PLAN: The Company reserves the right to modify the
Annual Bonus Plan in total or in part, at any time. Any such
change must be in writing and approved by the Compensation
Committee of the Board of Directors. The Compensation Committee
or plan designers reserve the right to interpret the plan
document as needed.
	 
	 	D.	 	ENTIRE AGREEMENT: This Plan is the entire agreement between
RedEnvelope, Inc. and the employee regarding the subject matter
of this Plan and supersedes all prior compensation or incentive
plans or any written or verbal representations regarding the
subject matter of this Plan.

II. BONUS PLAN ELEMENTS

	 	A.	 	ELIGIBLE EARNINGS are defined as base wages or salary payments,
overtime, shift differentials, and payments made for time off.
Eligible earnings do not include moving or relocation
allowances, educational reimbursements, or other bonuses or
commissions. The eligible earnings received during the fiscal
year represent the basis for the bonus calculation.
	 
	 	B.	 	BONUS TARGET is a percentage level of eligible earnings
determined by each participant’s position.
	 
	 	C.	 	COMPANY PERFORMANCE FACTOR is based on the Company achieving an
established a net income target. The net income target must be
achieved for any bonus to be paid. The Board of Directors will
approve the applicable target for each fiscal year within the
first 90 days of each fiscal year. The Company performance
factor is capped at 150% of the annual target.
	 
	 	D.	 	INDIVIDUAL PERFORMANCE FACTOR is based on the manager’s
evaluation of the participant’s performance and contribution for
the fiscal year. This factor may range from 25% to 175% of an
individual’s target bonus. The assigned factor may also be a
zero resulting in no bonus based on the manager’s evaluation of
performance and contribution.
	 
	 	E.	 	BONUS FORMULA AND CALCULATION EXAMPLE: Assume participant with
eligible earnings of $50,000 at the 5% target level, individual
performance factor of 115%, and Company performance of 100% of
target.

SAMPLE CALCULATION:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Individual	 	 
	Eligible Earnings	 	Target Incentive	 	Company Achievement	 	Performance	 	Annual Bonus Amount
	$50,000 X

	 	5% X
	 	100% X
	 	115% =
	 	$	2,875.00	 

In this example, the total bonus equals 5.75% of eligible earnings.

	 	F.	 	BONUS PAYMENTS: Bonuses will be paid as soon as practicable
after the Company announces its financial results for the fiscal
year, which generally occurs in May. All bonus payments will be
made net of applicable withholding taxes.
	 
	 	G.	 	TRANSFERS: Employees who are participants in the Plan and who
transfer to a new position not governed by this Plan will be
eligible on a pro-rata basis for the applicable period and paid
as defined by the Plan. Any exceptions to the Plan must be
designated in writing and approved by the Chief Executive
Officer.
	 
	 	H.	 	EMPLOYMENT AT WILL: The employment of all Plan participants at
RedEnvelope is for an indefinite period of time and is
terminable at any time by either party, with or without cause
being shown or advance notice by either party. This Plan shall
not be construed to create a contract of employment for a
specified period of time between RedEnvelope, Inc. and any Plan
participant.

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