SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS
Exhibit 10.26
SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS
This Settlement Agreement and Mutual Release of Claims (“Settlement Agreement”) is made as of
March 18, 2008, by and between Xxxxxxx Xxxx (“Xxxx”), on the one hand, and Image Entertainment,
Inc. (“Image”), on the other hand. Xxxx and Image sometimes collectively will be referred to as
the “Parties.”
This Settlement Agreement is based upon the following facts:
RECITALS
A. On or about January 22, 2007, Image and Xxxx entered into an Employment Agreement pursuant
to which Image hired Xxxx as its Chief Marketing Officer (the “Employment Agreement”).
X. Xxxx worked for Image from on or about January 22, 2007, through June 28, 2007 (the
“Employment”), when Image terminated Xxxx (the “Termination”).
C. Image and Xxxx dispute whether Image’s termination of Xxxx was “for cause” within the
meaning of the Employment Agreement.
X. Xxxx contends that Image owes him additional monies under and pursuant to the terms of the
Employment Agreement which claims are the subject of a Petition for Binding Arbitration filed by
Xxxx with Alternative Dispute Resolution Services, entitled Xxxxxxx Xxxx v. Image
Entertainment, ADRS Case No. 07-5613-JZ (the “Arbitration”). Image has responded to the
Petition and denied all material claims set forth therein.
E. It is the desire of the Parties hereto to settle all claims which exist between them
arising out of the Employment Agreement, the Employment, the Termination, the Arbitration and any
other matter.
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NOW, THEREFORE in consideration of the mutual promises and conditions contained herein, and
for valuable consideration, the adequacy and sufficiency of which are hereby acknowledged, the
Parties hereto agree as follows:
1. Settlement. In consideration for signing this Agreement and in exchange for
the promises, covenants and waivers set forth herein, Respondents will pay Xxxx the total amount of
Three Hundred and Thirty Five Thousand Dollars ($335,000.00) (hereinafter, the “Settlement
Payment”) provided that Xxxx does not exercise his right to revoke described in Paragraph 22 of
this Agreement. This Agreement will not be deemed effective until the revocation period described
in Paragraph 22 has expired. The Settlement Payment is the full and final settlement of all
matters (whether known or not known to, or capable of being known by Xxxx) alleged in the Action,
including those matters arising out of Xxxx’x employment with Image, and termination of his
employment. The Settlement Payment will be allocated as follows: (a)
Two Hundred Seventy Five Thousand Dollars ($275,000) of the settlement shall be
for wages, payable to Xxxxxxx Xxxx; (b) Sixty Thousand Dollars ($60,000) payable as attorneys fees
and costs, payable to Xxxxxxx Xxxx. Appropriate IRS Forms 1099 will be issued for the payment of
attorneys fees in the amount of Sixty Thousand Dollars ($60,000) and Image will make all
appropriate state and federal withholdings and deductions from the Two Hundred Seventy Five
Thousand Dollars ($275,000) allocated as wages.
The Settlement Payment checks will be given to Xxxx’x counsel immediately after the revocation
period described in Paragraph 22 expires and on the condition that Xxxx does not revoke the
Agreement within seven (7) days following
receipt by defense counsel of this Agreement executed by Xxxx and his counsel.
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Xxxx represents, warrants and acknowledges that Image does not owe any wages, commissions,
bonuses, sick pay, personal leave pay, severance pay, notice pay, vacation pay, or other
compensation or benefits or payments or form of remuneration of any kind or nature, other than that
specifically provided for in this Agreement.
2. Dismissal of Arbitration. As soon as the settlement checks clear the issuing bank,
Xxxx shall withdraw his Petition for Arbitration, dismissing with prejudice the Action.
3. Mutual Release. Except for the obligations imposed by this Settlement Agreement,
Xxxx, on behalf of himself, his employees, agents, authorized representatives, and assigns, hereby
releases Image, its predecessors-in-interest, successors-in-interest, officers, directors,
shareholders, employees, agents, authorized representatives, attorneys and assigns from any and all
claims and demands which he has against them of any kind whatsoever, whether known or unknown,
which he asserted or could have asserted, including but not limited to those claims arising out of
or relating to the Employment Agreement, the Employment, the Termination, the Arbitration, any
claims which could have been raised therein or in connection therewith..
Except for the obligations imposed by this Settlement Agreement, Image, on behalf of
itself and its predecessors-in-interest, successors-in-interest, officers, directors, shareholders,
employees, agents, authorized representatives, and assigns, hereby releases Xxxx, and his spouse,
employees, agents, authorized representatives, attorneys and assigns from any and all claims and
demands which it has against them
arising out of or relating to the Employment Agreement, the Employment, the Termination, the
Arbitration, any claims which could have been raised therein or in connection therewith, and any
other matter whatsoever, whether liquidated or contingent, certain or uncertain, known or unknown.
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It is the intention of the Parties hereto in executing this instrument that it shall be
effective as a full and final accord, satisfaction and release of all matters. The Parties
acknowledge that they are aware that they might hereafter discover facts in addition to or
different from those which they now know or believe to be true with respect to the subject matter
of this instrument, but that it is their intention hereby, fully, finally and forever to settle and
release each other from any and all disputes and differences, known and unknown, suspected and
unsuspected, which do now exist, may exist, or heretofore have existed between the Parties, and
that in furtherance of such intention, the releases herein given shall be and remain in effect as
full and complete general releases, notwithstanding the discovery or existence of any such
additional or different facts.
The Parties each acknowledge that he/it is familiar with the terms of California Civil
Code Section 1542, which reads:
“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 by him or her must have materially affected his or her settlement with the
debtor.”
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All Parties hereto, and each of them, hereby waive the provisions of Section 1542 and release
and relinquish any rights they may have under that section or
any similar law and the application of said Section or law to any future disputes with respect
to the Released Matters. All Parties acknowledge that before executing this waiver they were fully
advised by legal counsel about the effects of waiving the provisions of, and their rights under,
Civil Code Section 1542.
4. No Other Filings. Xxxx represents and agrees that he has not filed any lawsuits or
arbitrations against Respondents, or filed or caused to be filed any charges, complaints or other
proceedings against Respondents with any municipal, state or federal agency charged with the
enforcement of any law or any self-regulatory organization, other than the complaints referenced in
the Recitals to this Agreement. Pursuant to and as a part of Xxxx’x release and discharge of
Respondents, as set forth herein, Xxxx agrees, not inconsistent with EEOC Enforcement Guidance On
Non-Waivable Employee Rights Under EEOC-Enforced Statutes dated April 11, 1997, and to the fullest
extent permitted by law, not to xxx or file a charge, complaint, grievance, demand for arbitration,
or other proceedings against Respondents in any forum or assist or otherwise participate willingly
or voluntarily in any claim, arbitration, suit, action, investigation or other proceeding of any
kind which relates to any matter that involves Respondents, unless required to do so by court
order, subpoena or other directive by a court, administrative agency, arbitration panel or
legislative body, or unless required to enforce this Agreement. To the extent any such action may
be brought by a third party, Xxxx expressly waives any claim to any form of monetary or other
damages, or any other form of recovery or relief in connection with any such action except for
statutory required witness fees.
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5. Non Disparagement. Xxxx, on the one hand, and Image on the other hand, on behalf
of himself/itself and their respective shareholders, officers and directors, employees, agents, and
authorized representatives, each agree that he/it will not make, or cause to be made, any remarks
which are disparaging of any other party to this Agreement. Should a prospective employer contact
Image regarding Xxxx, Image shall refer all calls to a designated HR representative, who shall
state they only can provide Xxxx’x dates of employment and last position held, and shall provide
the same.
6. Confidentiality. It is understood and agreed by the Parties hereto that no
publicity shall be released in connection with this Settlement Agreement and that the terms and
conditions of this Settlement Agreement shall not be disclosed by the Parties or their attorneys to
anyone other than their agents or employees, accountants or bookkeepers whose knowledge of the
Settlement Agreement is necessary to effect the terms of the Settlement Agreement and/or any tax
ramifications flowing therefrom. Each party is responsible for any breach of this confidentiality
provision by its agents, employees, accountants or bookkeepers. This confidentiality provision is
a material term of the Settlement Agreement.
Nothing contained herein shall preclude any party from disclosing the terms of this Settlement
Agreement to any bona fide financial institution, government taxing authority and/or other
government entity pursuant to the terms of a subpoena or like document issued in any civil,
criminal, administrative, or quasi-judicial proceeding. Nothing contained herein shall preclude
Image from disclosing the terms of this Settlement Agreement in a Form 8-K filing with the United
States Securities & Exchange Commission, to the extent necessary to comply with federal law. Other
than as
indicated herein, if either party is asked concerning the status of this case by persons
previously aware of its existence, the only permissible response is that “it settled subject to a
confidentiality provision.”
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7. Non-Admission of Liability. This Settlement Agreement is executed solely for the
purpose of terminating and preventing further claims, complaints, and/or litigation, and does not
constitute an admission or acknowledgment by any party hereto of any wrong-doing on his/its part.
8. Non-Assignment. Each party hereto represents that he/it has not assigned,
transferred or purported to assign or transfer to any person, firm, partnership, or association,
any of the claims released hereunder. Each party hereto agrees to indemnify and hold harmless each
other party against any claim, demand, liability, costs, expenses, rights of action or causes of
action based on, arising out of, or in connection with any such transfer or assignment or purported
transfer or assignment.
9. Enforceability of this Agreement. Except as otherwise set forth herein, this
Agreement shall be enforceable pursuant to the provisions of California Code of Civil
Procedure § 664.6 and any party hereto may apply to a Court of appropriate jurisdiction within
the County of Los Angeles for an appropriate order or judgment pursuant to the terms hereof.
10. Binding Effect. All of the covenants, agreements, conditions and terms contained
in this Settlement Agreement shall be binding upon, apply and inure to the benefit of the
successors and assigns of the respective Parties hereto.
11. Future Assurances. Each of the Parties shall, upon request of any other party,
execute and deliver such additional documents as may be necessary or
convenient for the purpose of evidencing or perfecting any rights or interests arising under
this Settlement Agreement.
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12. Integration. This Settlement Agreement constitutes a final and complete statement
of the agreement between the Parties, and fully supersedes all prior agreements, representations or
negotiations, written or oral.
13. Legal Proceedings. In the event any legal proceeding is commenced for the purpose
of interpreting or enforcing any provision of this Settlement Agreement, the prevailing party in
such proceeding shall be entitled to recover a reasonable attorneys’ fee in such proceeding, or any
appeal thereof, in addition to the costs and disbursements allowed by law.
14. Authority. Image warrants and represents that the person executing this document
on its behalf is fully authorized to do so.
15. Counterparts and Facsimile. This Settlement Agreement may be signed in
counterparts. The parties further contemplate that this Settlement Agreement may be signed and
transmitted via facsimile. A signature received via facsimile shall be deemed to be an original
signature for all intents and purposes.
16. California Law. This Settlement Agreement is executed in the State of California,
and shall be governed by California law. Any suit commenced in connection with this Agreement
shall be filed in a Court of competent jurisdiction in Los Angeles County, California.
17. No Modification. This Settlement Agreement may not be modified except by an
agreement in writing duly executed by the Parties hereto.
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18. Representation. The Parties hereto represent and acknowledge that they have had
the opportunity to confer with counsel of their own selection with respect to the subject matter
hereof. This Settlement Agreement is entered into voluntarily by the Parties hereto. Moreover,
this Agreement shall be deemed to have been drafted equally by all parties hereto and shall not be
construed against either party as a result of the drafting hereof.
19. Severability. Each provision of this Settlement Agreement is separate, distinct,
and severable from the others. If any provision is held unenforceable, but the balance of the
Agreement nonetheless fulfills the primary intent of the parties hereto in settling this matter,
then the rest of the Settlement Agreement shall be enforced to the greatest extent possible.
20. Number and Gender. Headings are used herein for convenience only and shall have
no force or effect in the interpretation or construction of this Settlement Agreement. As used in
this Settlement Agreement, the singular shall include the plural, and the masculine shall include
the feminine and neutral gender.
21. Costs. Except as otherwise set forth herein, and in particular as set forth in
paragraph 1, each party hereto shall bear his/its own costs and attorneys’ fees relating to the
Action, this Settlement Agreement and the subject matter hereof.
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22. Age Discrimination In Employment Act. Xxxx understands and agrees that the
release of claims contained in this Agreement, includes any and all claims under the Age
Discrimination In Employment Act (“ADEA”), as amended, 29 U.S.C. Section 621, et seq. Xxxx
represents that he has been given a period of twenty-one (21) days within which to consider this
Agreement and the release of those claims, and the
opportunity to consult with his counsel regarding the release of those claims. Xxxx further
understands that pursuant to the ADEA he may revoke this Agreement within seven (7) days of the
execution of this Agreement by notifying counsel for Respondents of the revocation at the following
address and telephone number: Xxxxx X. Xxxxxxx, Esq., Xxxxxxx Xxxxxx & Green, 0000 Xxxxxxx Xxxx
Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, (000) 000-0000. Xxxx understands that any
obligation on the part of Respondents will not become effective until the expiration of the
revocation period, and will only become effective provided Xxxx has not exercised his right of
revocation.
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IN WITNESS whereof, the Parties have executed this Settlement Agreement as of the date first
set forth above.
| /s/ XXXXXXX XXXX | ||||
| XXXXXXX XXXX | ||||
| IMAGE ENTERTAINMENT, INC. |
||||
| By: | /s/ XXXXX XXXXXXXX | |||
| Its Authorized Representative | ||||
APPROVED AS TO FORM:
| RING & GREEN |
||||
| By: | /s/ XXXXXX X. RING | |||
| Xxxxxx X. Ring | ||||
| Attorneys for Petitioner Xxxxxxx Xxxx | ||||
| XXXXXXX XXXXXX & GREEN PC |
||||
| By: | /s/ XXXXX X. XXXXXXX | |||
| Xxxxx X. Xxxxxxx | ||||
| Attorneys for Respondent Image Entertainment, Inc. | ||||
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