Exhibit 10.2
TRANSITION AGREEMENT
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THIS TRANSITION AGREEMENT ("Agreement") is entered into as of
June
30, 2005, by and between Tumbleweed
Communications Corp. (the "Company") and
Jeffrey C. Smith ("Employee") (together the
"Parties").
R E C I T A L S
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WHEREAS, Employee is currently employed by the Company as its
President, Chief Executive Officer and
Chairman of the Company's Board of
Directors (the "Board");
WHEREAS, the Employee has elected to resign as the Company's
President, Chief Executive Officer and
Chairman of the Company's Board of
Directors, and the Parties desire to
memorialize the terms of Employee's
continuing service as a member of the Board
and as a special advisor to the
Company's Chief Executive Officer; and
WHEREAS, the Parties desire to resolve, fully and finally, all
outstanding matters between them related to
or arising in connection with
Employee's employment by, and separation
from, the Company.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth hereinafter, and for
other good and valuable
consideration, the receipt and sufficiency
of which is hereby acknowledged,
the Parties intending to be legally bound,
hereby agree as follows:
AGREEMENT
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1. EMPLOYEE'S RESIGNATION AND POSITION ON THE BOARD.
Pursuant to this Agreement, Employee's
resignation as the Company's President,
Chief Executive Officer and Chairman of the
Company's Board of Directors shall
be effective as of 5:00 p.m. Pacific time
on June 30, 2005 (the "Resignation
Date"). Employee shall continue as a member
of the Board and as a special
advisor to the Chief Executive Officer for
the period of two (2) years from
the Resignation Date (the "Transition
Term"), subject to the terms and
conditions set forth below. During the
Transition Term, Employee will provide
advisory services to the Company's Chief
Executive Officer as requested. Upon
the expiration of the Transition Term and
for as long as Employee continues to
serve as a member of the Board, the Company
shall pay Employee the sum of
$100,000 per year ("Director Compensation")
in addition to the standard
compensation package for Directors, and
Employee's Company stock options shall
continue to vest in accordance with the
terms and conditions of the option
plans under which such options were
granted; provided, however, that the
Parties agree that the Director
Compensation will be treated as 1099 income
for tax purposes and Employee will be
responsible for payment of all federal,
state and local taxes with respect to such
Director Compensation.
2. CONSIDERATION.
(a) In consideration of Employee's full waiver and release of
all
claims and the other agreements and
covenants contained herein, the Company
agrees to provide Employee with the
following payments and benefits (the
"Consideration"):
i. During the Transition Term, in addition to the standard
compensation package for Directors, the
Company shall pay Employee the sum of
$100,000 per year, on a semi-monthly basis,
less all applicable tax
withholding;
ii. During the Transition Term, all Company stock options
granted to Employee shall continue to vest
in accordance with the terms and
conditions of the option plans under which
such options were granted and
Employee shall be permitted to exercise
those options that continue vesting
for a period of ninety days following the
end of the Transition Term;
iii. During the Transition Term, Employee and his eligible
dependants may continue to participate in
the health and welfare employee
benefit plans offered by the Company,
subject to the terms and conditions of
the applicable benefit plans, which are
subject to change or termination by
the Company at any time; provided, however,
that if the applicable benefit
plans do not allow the Employee and his
eligible dependents to continue to
participate, the Company will reimburse for
COBRA premiums for Employee and
his eligible dependents, payable when such
premiums are due, provided Employee
elects to continue medical coverage under
applicable law, for the Transition
Term;
iv. During the Transition Term, Employee continues to
participate in the outstanding loan
forgiveness program; and
v. Employee shall retain his current Company issued laptop
computer and RIM Blackberry.
b. Employee acknowledges and agrees that the Company's
agreement
to provide the Consideration constitutes
payments and benefits beyond which he
would otherwise be entitled to but for the
mutual covenants set forth in this
Agreement. Employee further acknowledges
and agrees that the Consideration is
in addition to the Company's payment to him
of all reimbursable Company
expenses and accrued wages and vacation pay
earned through the Resignation
Date (the "Accrued Obligations").
c. Employee acknowledges and agrees that, except for the
Consideration and the Accrued Obligations,
Employee shall not be entitled to
receive any other compensation or benefits
of any sort including, without
limitation, salary, bonuses or any other
form of compensation or benefits from
the Company or any of its officers,
directors, employees, agents, insurance
companies, subsidiaries, successors or
assigns at any time.
d. If a Change of Control as defined below, occurs during the
Transition Term, Employee will receive all
Consideration through the
Transition Term and accelerated vesting
with respect to 100% of the then
unvested portion of all outstanding equity
awards. For all purposes under this
Agreement, "Change of Control" shall mean
(i) a merger, reorganization,
consolidation or similar event, whether in
a single transaction or in a series
of transactions (collectively the
"Transaction") unless immediately following
such Transaction (and after giving effect
to such Transaction) the Company's
stockholders immediately prior to the
Transaction own at least 50% the total
combined voting power of the surviving or
acquiring entity in substantially
the same proportions as their ownership of
the voting power of the Company's
outstanding securities immediately before
such Transaction; (ii) any person
(having the meaning ascribed to such term
in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended ("1934
Act") and used in Sections 13(d) and
14(d) thereof, including a "group" within
the meaning of Section 13(d)(3)) has
or acquires beneficial ownership (within
the meaning of Rule 13d-3 under the
1934 Act) of at least 50% of the total
combined voting power of the Company's
outstanding securities; (iii) the sale,
transfer or other disposition of all
or substantially all of the Company's
assets; or (iv) a complete liquidation
or dissolution of the Company.
3. RELEASE AND WAIVER.
a. In exchange for the Consideration, Employee and the Company,
on
behalf of themselves, and their respective
heirs, family members, executors,
past and present officers, directors,
employees, investors, agents, attorneys,
shareholders, administrators, affiliates,
divisions, subsidi
