EXHIBIT 10.41
SEPARATION AGREEMENT AND RELEASE
THIS AGREEMENT, is made and entered into as of February 19, 1996,
between XXXXXX XXXXXXXXX ("Xxxxxxxxx") and K-TEL INTERNATIONAL, INC., a
Minnesota corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Xxxxxxxxx is employed by the Company as its President and
Secretary and has served as a director of the Company and an officer and
director of its subsidiaries and affiliates;
WHEREAS, the purpose of this Agreement is to set forth the terms and
conditions under which Xxxxxxxxx and the Company will terminate their employment
relationship; and
WHEREAS, Xxxxxxxxx and K-5 Leisure Products, Inc. ("K-5") have entered
into the stock transfer and loan repayment agreement dated the date hereof (the
"Simitar Agreement") pursuant to which Xxxxxxxxx will acquire K-5 shares in
Simitar Entertainment, Inc.
NOW, THEREFORE, in consideration of the covenants and promises set
forth below, the adequacy of which the parties acknowledge, the parties agree as
follows:
1. Resignation. The Company has requested that Xxxxxxxxx resign as an
officer and director of the Company and its subsidiaries. Xxxxxxxxx hereby
acknowledges and confirms his resignation as an employee and officer of the
Company and as a director of the Company and an officer and director of its
subsidiaries and affiliates effective March 1, 1996; provided, however that from
the date hereof through March 1, 1996 Xxxxxxxxx shall remain on the payroll of
the Company as an employee but shall be on paid leave of absence. Xxxxxxxxx will
provide the Company with a letter of resignation in the form attached hereto as
Exhibit A on the date he signs this Agreement. The Company will maintain
Xxxxxxxxx'x letter of resignation with its official records, which will state
that Xxxxxxxxx voluntarily resigned his employment and other positions with the
Company and its subsidiaries and affiliates.
2. Payments. The Company has made or agrees to transfer the property
described below and make the following payments, less regular payroll deductions
and subject to applicable federal and state tax and FICA and Medicare
withholding, to Xxxxxxxxx:
(a) Final Payroll. $10,513.48 as the final payroll for the
period February 16, 1996 through March 1, 1996.
(b) Additional Consideration.
(i) The Company will pay Xxxxxxxxx $45,000 (without
any federal or state income tax withholding) upon expiration
of the period described in paragraph 10 below as full and
complete severance compensation (including all amounts due for
accrued vacation pay, sick pay or other severance or
compensation benefits) and as a consideration for the
undertakings of Xxxxxxxxx herein contained.
(ii) Xxxxxxxxx may receive up to an additional
$100,000 (which amount shall be escrowed to assure performance
of the Company's obligations hereunder) if he disposes of
350,000 of his shares of the Company pursuant to a Stock
Transfer and Loan Repayment Agreement of even date herewith by
and between Xxxxxxxxx and K-5 Leisure Products, Inc. on the
following basis:
If Shares Additional
--------- ----------
Disposed Of By Amount Received
-------------- ---------------
April 30, 1996 $100,000
or
after April 30, 1996
and on or before May 31, 1996 $ 65,000
or
after May 31, 1996
and on or before July 1, 1996 $ 35,000
or
after July 1, 1996 -0-
(iii) That certain equipment described on Exhibit B
hereto (the "Retained Equipment").
If Xxxxxxxxx rescinds this Agreement pursuant to paragraph 10 below, then this
Agreement shall be null and void, neither party shall have any obligations
hereunder and the Company will not be obligated to make the additional payments
or to provide the consideration specified in paragraph 2(b) above.
3. Insurance. Xxxxxxxxx has the right at his sole expense to continue
his health and life insurance under the C.O.B.R.A. laws upon his termination.
4. Benefits. Xxxxxxxxx is a participant in various employee benefit
plans sponsored by the Company as listed on Exhibit C. The payment of benefits,
including the amounts and the timing thereof, will be governed by the terms of
the employee benefit plans.
5. Full Compensation; Termination of Options and Consulting Agreement.
The payments that will be made to Xxxxxxxxx or for his benefit pursuant to this
Agreement will compensate him for and extinguish any and all of his claims
arising out of his employment with the Company or the termination of his
employment with the Company, including but not limited to his claims for
attorney's fees and costs, and all of his claims for any type of legal or
equitable relief as further set forth in paragraph 13 hereof. All options
granted by the Company to Xxxxxxxxx to purchase shares of the Company's common
stock shall terminate and expire as of the date hereof. Xxxxxxxxx also hereby
confirms that the consulting agreement dated January 1, 1986 between the Company
and Elex Resources, Inc., a company owned by Xxxxxxxxx, has been terminated and
no amounts are owing thereunder.
6. Records, Documents and Property. Prior to his execution of this
Agreement, Xxxxxxxxx will return to the Company (a) all its records,
correspondence, computer tapes and disks, and documents, and (b) all property of
the Company, including corporate credit cards and keys, except that Xxxxxxxxx
may retain for his personal use the following property ("Excluded Property"):
(i) sample products of the Company or its subsidiaries currently in Xxxxxxxxx'x
possession and which has been and will be used solely for personal enjoyment or
use, (ii) any public information concerning the Company, and (iii) Xxxxxxxxx'x
personal correspondence file currently in his possession at his residence,
provided that such files shall not contain any contracts or other material
information which is confidential or proprietary to the Company or its
subsidiaries. Xxxxxxxxx hereby represents that he has returned to the Company
all of its property in his possession or under his control, including, without
limitation, keys, badges, computer sheets, price sheets, reports, other
documents and copies of same, except for the Excluded Property and the Retained
Equipment. Xxxxxxxxx further represents that he has no such property in his
possession or under his control, except for the Excluded Property and the
Retained Equipment. Xxxxxxxxx understands that these representations are
material, and the Company is relying on these representations in entering into
this Agreement.
7. Proprietary Information and Relationships.
(a) Xxxxxxxxx reaffirms his continuing obligation to and
agrees not take for his own use, or disclose to others, trade secrets
or confidential information which he received as an employee, executive
officer or director of the Company or any of its subsidiaries.
Xxxxxxxxx further agrees that he will not disparage the Company, any of
its subsidiaries or affiliates and their respective officers,
directors, employees, shareholders, suppliers or customers and will not
do anything to harm the Company or any of its subsidiaries or
affiliates or their respective businesses or to interfere with their
respective relations with their officers, directors, employees,
shareholders, suppliers or customers, provided that competition with
the Company or its subsidiaries or affiliates shall not be deemed to be
any harm or interference so long as Xxxxxxxxx complies with all of the
other provisions of this Agreement. Xxxxxxxxx agrees that he will not
divulge to any other person, firm or corporation, or in any way use for
his own benefit, any trade secrets or confidential information of the
Company or its subsidiaries obtained during the course of his
employment with the Company.
(b) The Company agrees it will not disparage Xxxxxxxxx,
Simitar Entertainment, Inc. ("SEI") or its officers, directors,
employees, shareholders, suppliers or customers and will not do
anything to harm Xxxxxxxxx or SEI or their respective businesses or to
interfere with their respective relations with their officers,
directors, employees, shareholders, suppliers or customers, provided
that competition with Xxxxxxxxx or Simitar shall not be deemed to be
any harm or interference so long as the Company complies with it
obligations under paragraph 8(b) below.
(c) By executing this Agreement below, Xxxxxx Xxxxx ("Kives")
agrees he will not disparage Xxxxxxxxx, SEI or its officers, directors,
employees, shareholders, suppliers or customers and will not do
anything to harm Xxxxxxxxx or SEI or their respective businesses or to
interfere with their respective relations with their officers,
directors, employees, shareholders, suppliers or customers, provided
that competition with Xxxxxxxxx or Simitar shall not be deemed to be
any harm or interference so long as Kives complies with it obligations
under paragraph 8(b) below.
8. Non-Solicitation/Non-Hire of Employees.
(a) Xxxxxxxxx agrees that for a period of twelve months from
the date of this Agreement he will not, either directly or indirectly,
on his own behalf or in the service or on behalf of others solicit,
divert or hire, or in any manner attempt to solicit, divert or hire any
full-time employee of the Company or any subsidiary or affiliate, and
whether or not such employment was pursuant to a written or oral
contract of employment and whether or not such employment was for a
determined period or was at will except for those employees listed on
Exhibit D; provided that, in the event Xxxxxxxxx desires to employ any
such employee of the Company or its subsidiaries, he will contact the
Company's designated representative (who shall be Xxxxxx Xxxxx unless
otherwise notified by the Company) and such representative will give
Xxxxxxxxx permission to make an employment offer to such employee
unless the departure of such employee could cause a material hardship
to the Company or any of its subsidiaries.
(b) The Company agrees that for a period of twelve months from
the date of this Agreement it will not, either directly or indirectly,
on its own behalf or in the service or on behalf of others solicit,
divert or hire, or in any manner attempt to solicit, divert or hire any
full-time employee of Xxxxxxxxx or SEI, and whether or not such
employment was pursuant to a written or oral contract of employment and
whether or not such employment was for a determined period or was at
will.
(c) By executing this Agreement below, Kives agrees that for a
period of twelve months from the date of this Agreement he will not,
either directly or indirectly, on his own behalf or in the service or
on behalf of others solicit, divert or hire, or in any manner attempt
to solicit, divert or hire any full-time employee of Xxxxxxxxx or SEI,
and whether or not such employment was pursuant to a written or oral
contract of employment and whether or not such employment was for a
determined period or was at will.
(d) In the event the Simitar Agreement is terminated in
accordance with paragraph 9 thereof without the transaction
contemplated thereby having been closed (the "Simitar Agreement
Termination"), then the obligations of the parties hereto and Kives
under this paragraph 8 shall terminate and expire upon the Simitar
Agreement Termination.
9. Time to Consider this Agreement. Xxxxxxxxx may have twenty-one (21)
days from the day that he receives this Agreement, not counting that day upon
which he receives it, to consider whether he wishes to sign this Agreement.
Xxxxxxxxx acknowledges that if he signs this Agreement before the end of the
21-day period, it will be his personal voluntary decision to do so.
10. Rescission. Xxxxxxxxx may rescind this Agreement within fifteen
(15) days after he signs it, not counting the day upon which he signs it. This
Agreement shall not become effective or enforceable until after the 15-day
rescission period has expired. If Xxxxxxxxx rescinds this Agreement, the Company
shall have no obligations under this Agreement.
11. Procedures for Acceptance or Revocation. To accept the terms of
this Agreement, Xxxxxxxxx must deliver this Agreement, after it has been signed,
to the Company by hand or by mail within the 21-day period that he has to
consider this Agreement. To rescind acceptance, Xxxxxxxxx must deliver to the
Company a written, signed statement of rescission within the 15-day rescission
period. All deliveries shall be made to the Company at the following address:
Xx. Xxxxxx Xxxxx
K-5 Leisure Products, Inc.
000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxxx
Xxxxxx X0X 0X0
If Xxxxxxxxx chooses to deliver acceptance or notice of rescission by mail, it
must be (a) postmarked within the period stated above, (b) properly addressed to
the Company at the address stated in the preceding sentence, and (c) sent by
certified mail, return receipt requested.
12. Advice to Consult with an Attorney. Xxxxxxxxx understands and
acknowledges that he is being advised by the Company to consult with an attorney
prior to signing this Agreement. Xxxxxxxxx represents that he has consulted with
an attorney to the extent that he thinks appropriate. Xxxxxxxxx has not relied
on any explanations, statements or premises made by the Company or its agents or
attorneys other than as set forth in this Agreement.
13. General Release by Xxxxxxxxx and the Company.
(a) Definitions. All the words in this paragraph have their
plain meaning in ordinary English. Specific terms used in this
paragraph have the following meanings:
(i) "Xxxxxxxxx" means Xxxxxx Xxxxxxxxx and includes
Xxxxxxxxx and anyone who has or obtains any legal rights or
claims through him.
(ii) "Company" means K-tel International, Inc., a
Minnesota corporation and its subsidiaries and affiliates and
any organization or entity related to K-tel International,
Inc. in the present or past, and past or present officers,
directors, employees, shareholders, committees, agents,
attorneys, insurers, indemnitors, successors or assigns of,
any person who acted on behalf of, or an instruction from,
K-tel International, Inc. or any related organization or
entity.
(b) Xxxxxxxxx'x Claims. The claims Xxxxxxxxx is releasing in
paragraph 13(c) below include all of his rights to any relief of any
kind from the Company, including but not limited to:
(i) all claims he has now, whether or not he now
knows about the claims;
(ii) all claims for attorney's fees;
(iii) all claims against the Company for alleged
discrimination against him under any federal, state, or local
law, including, for example, the federal Age Discrimination in
Employment Act ("ADEA") and the Minnesota Human Rights Act
("MHRA");
(iv) all claims arising out of Xxxxxxxxx'x
employment, the Company's request for his resignation, or
separation from employment with the Company, including, but
not limited to, any alleged breach of contract, wrongful
termination, defamation or intentional infliction of emotional
distress;
(v) all claims for any other alleged unlawful
employment practices arising out of or relating to Xxxxxxxxx'x
employment or separation from employment;
(vi) all claims for any other form of remuneration;
and
(vii) all claims against all parties related to that
certain transaction described in an Agreement of Purchase and
Sale dated June 28, 1995, as amended.
(c) Xxxxxxxxx'x Release. The money and benefits Xxxxxxxxx will
receive as set forth in this Agreement are full and fair payment for
the release of all his claims. The Company does not owe him anything in
addition to what he will receive under this Agreement; provided,
however, that Xxxxxxxxx shall continue to be entitled to any applicable
indemnification under the Company's current By-laws or Minnesota law as
an officer and director of the Company and its subsidiaries and
affiliates.
(d) Payment by Related Companies. Xxxxxxxxx shall cause to be
paid prior to payment to him of the amount due pursuant to paragraph
2(b)(i) the net amount of $8,019.70 owing by Excel International, Inc.
to the Company as of the date hereof.
(e) Release by Company. The Company hereby releases Xxxxxxxxx
from any claims or liabilities to the Company arising prior to the date
hereof, except for (i) Xxxxxxxxx'x obligations under this Agreement and
(ii) matters where material information concerning the matter has been
concealed by Xxxxxxxxx from the Company.
14. Statements. If either party is asked about the circumstances of
Xxxxxxxxx'x departure, the party shall respond that a mutually satisfactory
agreement was reached.
15. Claims Involving the Company; Reasonable Assistance. In
consideration of the payments provided above, Xxxxxxxxx agrees to make himself
reasonably available to the Company (consistent with any obligations Xxxxxxxxx
has or may have to any future employer or business in which he engages) for
consultation regarding the Company's past operations, record catalogue and
licensing and any pending or future lawsuits involving the Company where
Xxxxxxxxx has or may have knowledge of the underlying facts. Should the Company
require Xxxxxxxxx'x assistance either (i) at any place outside the state of
Minnesota, (ii) for any extended period or (iii) after the earlier of the
Simitar Agreement Termination or December 31, 1996, Xxxxxxxxx will be reasonably
compensated, plus appropriate out of pocket expenses (including business class
airfare). The Company will advance Xxxxxxxxx the anticipated compensation and
out of pocket expenses prior to his providing the requested assistance and
Xxxxxxxxx will promptly present an expense statement to the Company upon
completion of the assistance and any balance due Xxxxxxxxx will be promptly paid
by the Company or any refund due the Company will be promptly paid by Xxxxxxxxx.
In addition, Xxxxxxxxx will not voluntarily aid, assist, or cooperate with any
actual or potential claimants or plaintiffs or their attorneys or agents in any
claims or lawsuits proposed to be asserted, pending or commenced on the date
hereof or in the future against the Company; provided, however, that nothing in
this Agreement will be construed to prevent Xxxxxxxxx from testifying at an
administrative hearing, a deposition, or in court in response to a lawful
subpoena in any litigation or proceeding involving the Company.
16. Non-Admission. Nothing in this Agreement is intended to be, nor
will be deemed to be, an admission of liability by the Company that it has
violated any state or federal statute, local ordinance, or principal of common
law, or that it has engaged in any wrongdoing or that Xxxxxxxxx has any claim
against the Company.
17. No Other Agreements. This Agreement and the employee benefit plans
in which Xxxxxxxxx is a participant as described on Exhibit C supersede all
prior oral and written agreements and communications between the parties.
Xxxxxxxxx agrees that any and all claims which he might have against the Company
are fully released and discharged by this Agreement and that the only claims
that he may hereafter assert against the Company will be derived only from an
alleged breach of the terms of this Agreement or of an employee benefit plan as
described on Exhibit C in which Xxxxxxxxx is a participant.
18. Entire Agreement. This Agreement and the employee benefit plans as
described on Exhibit C in which Xxxxxxxxx is a participant constitute the entire
agreement between the parties with respect to the termination of Xxxxxxxxx'x
employment relationship with the Company, and the parties agree that there were
no inducements or representations leading to the execution of this Agreement
except as stated in this Agreement.
19. Invalidity. In case any one or more of the provisions of this
Agreement should be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained in
this Agreement will not in any way be affected or impaired thereby.
20. Voluntary and Knowing Action. Xxxxxxxxx represents that he has read
and understands the terms of this Agreement and that he is voluntarily entering
into this Agreement to resolve his disputes against the Company.
21. Future Dealings between the Parties. The parties acknowledge that
they may in the future have dealings with each other. Any such future dealings
will be determined by such written agreement as the parties may enter into after
this Agreement is signed and this Agreement will not apply to any such future
dealings.
22. Governing Law. This Agreement will be construed and interpreted in
accordance with the laws of the State of Minnesota.
23. Jurisdiction, Service of Process. Any suit, action or proceeding
between the parties with respect to this Agreement or any judgment entered by
any court in respect of any thereof may be brought in the courts of the State of
Minnesota or in the U.S. District Court for the District of Minnesota as a party
hereto may elect, and the other party hereby accepts the nonexclusive
jurisdiction of those courts for the purpose of any such suit, action or
proceeding. In addition, each party hereby irrevocably waives, to the fullest
extent permitted by law, any objection that he or it may now or hereafter have
to the laying of venue of any such suit, action or proceeding arising out of or
relating to this Agreement or any judgment entered by any court in respect of
any thereof brought in the State of Minnesota, and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in the State
of Minnesota has been brought in an inconvenient forum.
24. Binding Effect. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective heirs, successors or assigns.
25. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the respective parties hereto have executed this
Agreement on the day and year written below their respective signatures to this
Agreement.
K-TEL INTERNATIONAL, INC.
By /S/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx, Chairman
and Chief Executive Officer
Dated: March 1, 1996
/S/ Xxxxxx Xxxxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxxxx
Dated: March 15, 1996
By executing this Agreement in the space below, Xxxxxx Xxxxx agrees to
the provisions of paragraphs 7(c) and 8(c) of this Agreement as if he was a
party to this Agreement.
/S/ Xxxxxx Xxxxx
-----------------------------------------
Xxxxxx Xxxxx
Dated: March 1, 1996
Exhibit A
RESIGNATION
Effective March 1, 1996, the undersigned resigns as the President,
Secretary, as a member of its Board of Directors and as an officer of K-tel
International, Inc. and as an Officer and Director of its subsidiaries and
affiliates.
/S/ Xxxxxx Xxxxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxxxx
Exhibit B
Retained Equipment
------------------
1. Compaq 575 and peripheral equipment
2. HP Laser Jet 4
3. Compaq Contura Aero and peripherals
4. NEC P60M and peripherals
5. Satellite dish
Exhibit C
Employee Benefit Plans
401(k) Plan
(participation through date of termination,
benefits as defined in the plan)
Exhibit D
List of Certain Employees
1. Xxxxxx Xxxx
2. Xxxxxxx Xxxxxxxxx
3. Xxxx Xxxxxxxxx
4. Xxxxxxxx Xxxxxxxx
