SETTLEMENT AGREEMENT AND RELEASE
Exhibit 10.1
SETTLEMENT AGREEMENT AND
RELEASE
Claimant/Counterclaim
Respondent Xxxx Xxxxxxxx (“Xxxxxxxx” or
“Claimant”) and Respondent/Counterclaim Claimant
Liberated Syndication, Inc. (“Libsyn” or
“Respondent” or “Company”), parties to Case
Number 00-00-0000-0000 before the American Arbitration Association
(the “Arbitration”), execute this Settlement Agreement
and Release (“Agreement”), agreeing as set forth below.
The Effective Date of this Agreement is June 8, 2021.
PREAMBLE
Whereas
on or about April 24, 2020, Busshaus initiated an arbitration
against Libsyn asserting severance claims for wages, compensation,
and benefits arising from his employment agreement originally dated
March 1, 2017, and later extended and modified by further
agreement, as well as claims for unlawful discharge and violation
of Pennsylvania’s Wage Payment and Collection Law
(WPCL);
Whereas
Libsyn disputed Busshaus’s claims and asserted counterclaims
for breach of fiduciary duty, professional negligence, fraud,
unjust enrichment, and conversion; and
Whereas
the parties desire to settle their disputes and toward that end
agree as follows:
1. Discontinuance of
the Arbitration Demand. As consideration and inducement for
this Agreement, each Party agrees to discontinue his or its claims
or counterclaims set forth in the Arbitration with prejudice,
without costs to any party, with the exception of Libsyn remaining
responsible for all costs of the Arbitration (including AAA fees
and the fees of the Arbitrator Xxxxxxx Xxx). Claimant and
Respondent agree to jointly move for the dismissal of all claims in
the Arbitration via email or other communication to Xx. Xxx within
one (1) day of receiving the settlement proceeds described in
paragraph 2.
2. Payment. The
total financial settlement is a payment of $1,650,000 (the
“Settlement Amount”) by Libsyn. Within ten (10) days of
the Effective Date, $990,000 will be issued to Claimant via a wire
(less any withholdings on this amount required by law or authorized
by Claimant) at an account to be identified by Claimant, which
shall be reported on a Form W-2 in accordance with federal, state,
and local tax-reporting requirements, if any (the “W-2
Payment”).1 As to the remaining portion, as payment
for counsel fees under the WPCL, Respondent shall make a payment
within 10 days of the Effective Date via a wire to XxXxxxxx
Xxxxxxxxx & Xxxxxxxxxxxx at an account to be identified for the
gross sum of $660,000 and will issue a 1099 MISC to Busshaus
related to this payment (the “1099 Payment”). Claimant
acknowledges and agrees that this amount represents consideration
to which his entitlement is disputed and is adequate consideration
for his respective commitments in this Agreement.
In the
event that it is subsequently determined by any federal, state, or
local taxing authority that Claimant owes any additional taxes with
respect to the Settlement Amount, it is expressly agreed that the
determination of any tax liability, if any, is between the Claimant
and that taxing authority, and Respondent will not be responsible
for the payment of such taxes, including any interest and
penalties, except with respect to any of Respondent’s
portions of FICA and other federal employer-portion tax withholding
associated with the payment set forth in this
paragraph.
3. Claimant’s
Payment of Other Federal Income Tax Obligations. Libsyn
issued certain Corrected W-2s to Claimant for tax years 2017, 2018,
and 2019. Claimant agrees that he shall be solely responsible for
any and all federal income taxes owed in connection with the
Corrected W-2s as determined by the IRS based on amended tax
returns filed by Busshaus. Claimant agrees to extinguish any such
tax liability by, in the first instance, using the W-2 Payment
toward payment of the tax liability, and in the second instance, to
the extent possible, by paying any remaining portion of taxes owed
within thirty (30) days of receipt of his federal tax refund for
tax year 2021. Notwithstanding the foregoing, Claimant agrees that
he shall extinguish any tax liability associated with the Corrected
W-2s by no later than June 30, 2022. Further, Claimant agrees to
provide Libsyn at the appropriate time with completed Form 4669(s),
whether in connection with his tax obligations associated with the
Corrected W-2s or the Settlement Amount, as well as any other
reasonable evidence to confirm the above payments as requested by
Libsyn for each of the above tax years.
4. Forfeiture
of 1,062,500 Shares of Libsyn Stock. The 1,062,500 unvested
performance shares of Libsyn stock at issue in the Arbitration (the
“Forfeited Shares”) will be deemed forfeited by
Claimant upon execution of this Agreement and the associated stock
certificate(s) shall be returned to Libsyn and/or the transfer
agent within fourteen (14) days of the Effective Date. Claimant
will have no further, right, title or
interest in the Forfeited Shares. If Claimant is unable in
good faith to return the stock certificates within 14 days of the
Effective Date, his failure shall not be deemed a material breach
of this Agreement and the parties shall work together in good faith
to accomplish the return contemplated by this
paragraph.
Busshaus was
previously issued 937,500 shares of Libsyn stock that have vested
(the “Vested Shares”). The Vested Shares are not
covered by the preceding paragraph. Libsyn agrees not to object to
or dispute any legal opinion related to Rule 144 or to remove any
restrictive legend that is acceptable to the transfer
agent.
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5. Wizzard
Software Credit Card in the Name of Busshaus. Within thirty
(30) days of the Effective Date, Libsyn will remove all charges,
including recurring charges related to Amazon or Amazon Prime, from
this credit card, will remove the card from Amazon or Amazon Prime
as a stored card so that no more Libsyn-related charges are made to
this credit card, and will verify in writing to counsel for
Busshaus that the foregoing has occurred. If Libsyn is unable in
good faith to remove all charges within 30 days of the Effective
Date, Libsyn’s failure shall not be deemed a material breach
of this Agreement and the parties shall work together in good faith
to remove all charges as contemplated by this paragraph. Busshaus
will then take any required action to close out and cancel the
card.
6. Mutual
Release.
x. Xxxxxxxx
Release of Libsyn. Unless expressly excepted by the terms of
this Agreement or with regard to a claim for breach of this
Agreement, Claimant hereby releases, waives, and forever discharges
Respondent, including its past or present employees, officers,
directors, trustees, board members, stockholders, agents, parent
entities, successors, assigns, and other representatives, and
anyone acting on their joint or several behalf (the “Libsyn
Released Parties”) from any and all known and unknown claims,
causes of action, demands, damages, costs, expenses, liabilities,
or other losses that have arisen to date or may arise in the future
from, out of, or related to any employment of Claimant by
Respondent and all actions or omissions taken or committed as part
of that employment or the termination thereof or resignation
therefrom, including but not limited to the claims asserted or
raised in the Arbitration or which could have been asserted or
raised in the Arbitration (the “Busshaus Claims”). This
paragraph is not intended to and does not modify, limit, or alter
Libsyn’s obligations under paragraphs 7 and 8
hereof.
b. Libsyn
Release of Busshaus. Unless expressly excepted by the terms
of this Agreement or with regard to a claim for breach of this
Agreement, Respondent hereby releases, waives, and forever
discharges Claimant, including his agents and other
representatives, heirs, administrators, executors, and assigns, and
anyone acting on their joint or several behalf (the “Busshaus
Released Parties”) from any and all known and unknown claims,
causes of action, demands, damages, costs, expenses, liabilities,
or other losses that have arisen to date or may arise in the future
from, out of, or related to any employment of Claimant by
Respondent and all actions or omissions taken or committed as part
of that employment or the termination thereof or resignation
therefrom, including but not limited to the claims asserted in the
Counterclaims or otherwise asserted or raised in the Arbitration or
which could have been asserted or raised in the Arbitration (the
“Libsyn Claims”).
7. Libsyn’s
Defense, Hold Harmless, and Indemnification of Busshaus.
Libsyn agrees to defend, hold harmless, and indemnify Busshaus to
the fullest extent required or permitted by law, including
advancement of defense costs and expenses, with regard to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of
Libsyn, by reason of the fact that Busshaus is or was an officer
and/or employee of Libsyn, including actions or omissions taken or
occurring in those capacities. In connection with any of the
foregoing obligations, Libsyn shall have the right to select
counsel and other professionals to represent Claimant’s
interests, subject to the consent of Busshaus, which consent will
not be unreasonably withheld.
Busshaus represents
and warrants that, to his knowledge, he presently is not a party to
or the subject of any threatened, pending or completed action,
suit, proceeding, or inquiry, whether civil, criminal,
administrative or investigative, including, without limitation, an
action by or in the right of the corporation that would implicate
the above paragraph. Any breach of these representations shall be
considered a material breach of this settlement
agreement.
The
above paragraph concerning Libsyn’s indemnification and
defense obligations is not intended to and does not cover the
litigation captioned as 1:19-cv-09070-NRB, SEC x. Xxxxxxx and Xxxxxxxx in the U.S.
District Court for the Southern District of New York. The Parties
acknowledge that each is aware of class action solicitations made
by one or more attorneys related to recent SEC filings by
Libsyn.
In any
threatened, pending or completed action, suit, proceeding, or
inquiry, whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the
corporation, Busshaus agrees to provide reasonable and good faith
cooperation and assistance if requested by Libsyn in its defense of
any such threatened, pending or completed action, suit, proceeding,
or inquiry, whether civil, criminal, administrative or
investigative, including, without limitation, an action by or in
the right of the corporation.
8. D&O
Insurance. In connection with the execution of this
Settlement Agreement, Libsyn has provided Busshaus with copies of
its Management Liability and Company Reimbursement Insurance Policy
Declarations issued by XL Specialty Insurance Company and its
Directors and Officers Liability Excess DIC Policy Declarations
issued by Westchester. Libsyn represents and warrants that it will
use its best efforts to maintain coverage at roughly the same
levels identified in the foregoing declarations, including, if
necessary, appropriate tail coverage to avoid any potential lapse
in coverage.
9. Cooperation.
So long as such cooperation does not implicate the limitations
placed on Busshaus by the October 11, 2019 Section 102(e) Order
issued by the SEC, in addition to the cooperation contemplated by
paragraph 7, above, Busshaus agrees to, in good-faith, be
reasonably available to respond to requests or questions (by phone
or e-mail) in connection with any reasonable request by the Company
regarding matters of which Busshaus has personal knowledge or which
were within the purview of Busshaus’ job responsibilities
while employed by Libsyn. This includes responding to request for
historical documents and other information that Busshaus may have
as a result of his tenure with the Company.
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So long
as such cooperation does not implicate the limitations placed on
Busshaus by the October 11, 2019 Section 102(e) Order issued by the
SEC, Busshaus also agrees to reasonably cooperate with Libsyn in
assisting in the defense of any existing or future charges, claims,
demands, complaints, subpoenas, government investigations,
arbitrations or lawsuits filed against Libsyn, including any of its
past or present directors or officers, related or affiliated
companies, parent companies, or subsidiaries, or in the prosecution
of any claim, demand, complaint, arbitration or lawsuit filed by
Libsyn against any person or entity (collectively, “Libsyn
Actions”), where Busshaus, during Busshaus’ employment
with the Company, had involvement in or knowledge of any decision,
negotiation or other process or procedure that is the subject of
any of the Libsyn Actions, where Busshaus had previously
participated in the defense of any of the Libsyn Actions, or where
it is alleged that Busshaus has knowledge of any facts at issue in
any of the Libsyn Actions. Busshaus’ cooperation shall
include, but not be limited to, meeting with Libsyn’s counsel
and providing sworn statements and testimony where and when
reasonably requested. Busshaus agrees that he shall not be entitled
to any payments or compensation for providing such cooperation,
excluding any required travel expenses.
10. No Admission Of
Liability. Claimant and Respondent each acknowledge and
agree that neither Party by providing the consideration described
above and by entering into this Agreement, admits or has admitted
to any unlawful conduct or liability to the other Party or to any
allegations made by the other Party in the Arbitration.
Accordingly, the Agreement shall not be admissible as evidence in
any federal, state, or regulatory/administrative proceeding as
evidence that any party has prevailed, except that the Agreement
may be submitted to any appropriate tribunal in any proceeding
brought by either party alleging breach of the
Agreement.
11. Knowing and
Voluntary Execution. Each Party represents and warrants
that, prior to executing the Agreement, he or it has been advised
to consult with counsel; he or it has had a reasonable opportunity
to consider the terms of the Agreement; he or it has fully
discussed its meaning and effect with his or its attorney; his or
its attorney has explained the meaning and effect of each of the
provisions of the Agreement; and he or it has entered into the
Agreement voluntarily. Libsyn further represents that it has the
authority from its Board of Directors to enter into this
Agreement.
12. Arbitration.
Any dispute or controversy arising under or in connection with this
Agreement shall be resolved by binding arbitration. The arbitration
shall be held in the City of Pittsburgh, Commonwealth of
Pennsylvania, and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the rules of the
American Arbitration Association (AAA) then in effect at the time
of the arbitration, and otherwise in accordance with the principles
which would be applied by a court of law or equity. The arbitrator
shall be acceptable to both Claimant and Respondent.
13. No Assignment Of
Claims. Each party hereby represents and warrants that he or
it has not previously assigned nor purported to assign or transfer
to any person or entity any of the claims or causes of action
herein released.
14. Severability.
Should any provision of the Agreement be declared or be determined
by any court to be illegal or invalid, the validity of the
remaining parts, terms, or provisions shall not be affected, and
any illegal or invalid part, term, or provision shall be deemed not
to be part of the Agreement.
15. Counterparts.
The Agreement may be executed in one (1) or more counterparts, each
deemed to be a duplicate
original, and all of which, taken together, shall constitute a
single instrument. The Agreement may be executed by electronic
signature (e.g, DocuSign) so long as there is a contemporaneous
record of an intent to sign.
16. Notices. Any
and all Notices sent pursuant to this Agreement shall be deemed
validly sent if sent via Federal Express (or similar carrier)
and/or via email to the following respective
addresses:
a.
To the
Company:
0000
Xxxx Xxxx, #000
Xxxxxxxxxx,
Xxxxxxxxxxxx 00000
Attn:
Xxxxxx Xxxx
xxxxxx@xxxxxx.xxx
With a
copy to:
Xxxxx
Xxxx
Xxxxxxx
Xxxxx LLP
0000
Xxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxx 00000
xxxxx@xxxxxxxxxxxx.xxx
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b.
To Xxxx
Xxxxxxxx:
Xxxx
Xxxxxxxx
0000
XxXxxxxxx Xxxx Xxxx
Xxxxxxx
Xxxx XX 00000
xxxxxxxxx@xxxxx.xxx
With a
copy to:
Xxxxx
Xxxxxxxxxxxx
Xxxxxxxx Xxxxxxxxx
& Xxxxxxxxxxxx
0000
Xxxxxxx Xxxxxxxx
Xxxxxxxxxx, XX
00000
xxxxxxxxxxxx@xxxxxxxxxxxxxxxx.xxx
17. Entire
Agreement. The Parties agree that this Agreement is the
complete agreement and understanding between the parties with
respect to the subject matter hereof and that it supersedes and
preempts any prior understandings, agreements or representations by
or between the Parties, written or oral, on the subject matter
hereof. The terms of the Agreement may not be modified or waived
except in writing signed by both of the parties hereto in order to
be binding.
[Signatures
On Following Page]
1 Because the W-2 Payment to Busshaus qualifies as
“supplemental wages” under Treas. Reg.
31.3402(g)-1(a)(1)(i) and because the three conditions described in
Treas. Reg. 31.3402(g)-1(a)(7)(i)(A)-(C) are satisfied, the Parties
agree that the optional flat-rate withholding method described at
Treas. Reg. 31.3402(g)-1(a)(1)(vi) will be used to determine the
appropriate withholding as to the W-2 Payment. Treas. Reg.
31.3402(g)-1(a)(1)(vi) & (7). Currently, that optional
flat-rate method withholding rate is 22% rate as described at
Treas. Reg. 31.3402(g)-1(a)(7)(iii)(F), as amended by Tax
Reform’s change of the corresponding rate at IRC 1(i)(2) and
will be used by the Parties. IRS Notice 2018-14,
IV.
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IN
WITNESS WHEREOF, in consideration of their respective commitments
herein set forth and with the intention to be legally bound hereby,
the parties hereto have executed the Agreement, in counterpart
originals or otherwise, as of the dates set forth
below.
Liberated Syndication, Inc., by:
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Date: June 8,
2021
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By:
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/s/ Xxxx
Xxxxxx
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Xxxx
Xxxxxx |
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Chairman of the
Board |
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Xxxx Xxxxxxxx, by:
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Date: June 8,
2021
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By:
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/s/ Xxxx
Xxxxxxxx
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Xxxx
Xxxxxxxx |
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