Exhibit 10.11
SEPARATION AND RELEASE AGREEMENT
THIS SEPARATION AND RELEASE AGREEMENT (the "Agreement") is entered into
in April 12, 2004 by and between Xxxx Xxxx (the "Employee") and The Singing
Machine Company, Inc., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Employee was employed by the Company as its Senior Vice
President pursuant to an employment agreement dated October 22, 2003 (the
"Employee Agreement");
WHEREAS, the Company and the Employee have mutually decided that the
Employee will resign and receive compensation pursuant to the terms and
conditions contained herein;
WHEREAS, the parties hereto desire to put to rest and settle all
controversies between them related to or arising out of Employee's employment
with, and resignation from, the Company and the facts and circumstances
underlying the same, and to settle and compromise any and all claims and
differences between them, of any sort, origin or description in order to avoid
the costs and uncertainties inherent in possible future litigation.
NOW, THEREFORE, Employee and the Company, intending to be legally bound
hereby and in consideration of the promises contained herein, do hereby agree as
follows:
1. RESIGNATION. The Employee agrees to resign as (i) the Company's
Senior Vice President and from any other positions that he holds with the
Company and (ii) from any other positions that he holds with International SMC
(HK) Ltd., the Company's Hong Kong subsidiary, effective as of the business day
on Friday, April 9, 2004 (the "Resignation Date"). The Employee acknowledges and
agrees that after the Resignations Date, he will not have the authority to
represent or bind the Company or its subsidiaries as an officer or employee.
2. TERMINATION OF EMPLOYMENT AGREEMENT AND OPTIONS.
2.1 Employee acknowledges and agrees that this Agreement shall
serve to terminate his Employment Agreement and that this Agreement sets forth
all the compensation that is payables to him, effective as of the Resignation
Date.
2.2 The Employee acknowledges and agrees that he does not own any
vested options as of the date of this Agreement. The Employee owns unvested
options (the "Unvested Options") to purchase 50,000 shares of the Company's
common stock at an exercise price of $1.97 per share, which options do not begin
vesting until January
December 19, 2004. The Employee acknowledges that all of the Unvested Options
owned by him will be deemed cancelled, null and void on the Resignation Date.
2.3 The Company and the Employee acknowledge the termination of the
Employment Agreement and the survival and incorporation by reference herein of
the provisions, terms and conditions set forth in Sections 12(c)-(d), 13 and 26
of the Employment Agreement.
2.4 The Employee also agrees to amend Sections 12(a), 12(b), 15 and 26
of his Employment Agreement pursuant to the amendments contained herein and
these amended provisions are incorporated by reference in this Agreement. The
Employee agrees that he will comply with the restrictive covenants contained in
Section 12 (a) of the Employment Agreement for a period of one (1) year after
his Resignation Date and that he aggress that he will not work directly or
indirectly for Memcorp, Inc. or Xxxxx Electronics or any of their respective
affiliated businesses during this one (1) year time period. The Employee agrees
that he will be bound by the non-solicitation provisions set forth in Section
12(b) of the Employment Agreement for a period of one year after the date of
this Agreement. The amendments to Sections 15 and 26 of the Employment Agreement
are contained in Section 12 and 13 of this Agreement, respectively. .
3. SEVERANCE PAYMENTS.
3.1 SEVERANCE PAYMENT. In consideration of the covenants set forth herein,
the Company agrees to pay the Employee a severance payment equal to $51,050, in
the aggregate, which is comprised of (i) salary payments in the amount of
$39,000, (ii) moving expenses equal to $11,000 and (iii) COBRA reimbursement
payments equal to $1,050. The Company will make salary payments and COBRA
reimbursement payments in the amounts and on the dates set forth on Schedule 3.1
attached hereto.
3.2 BENEFITS. The Company will provide the Employee with information
regarding and benefits which may be converted to individual coverage and/or
coverage which includes her spouse in accordance with Consolidated Omnibus
Budget Reconciliation Act (COBRA) regulations. Employee acknowledges and agrees
that she will not be entitled to any perquisites, benefits or other compensation
whatsoever after the Resignation Date, except as described in this Agreement.
3.3 AMOUNTS STATED BEFORE TAXES. All amounts stated in this Agreement
are prior to any deduction for applicable withholding taxes and other amounts
that are required to be withheld or deducted by Federal and Florida Law.
4. WAIVER AND RELEASE. For good and valuable consideration,
the receipt and sufficiency of which is acknowledged by the Employee, including
the payments to the Employee as described in Section 3 hereof, Employee hereby
agrees that regardless of who assumes his duties, his separation of employment
from the Company was not due in any way to age or any other type of
discrimination or any wrongful act of the Company, and Employee and his
Releasors do hereby voluntarily and fully release and forever discharge the
Company, together with its past and current predecessors, successors,
shareholders, officers, directors, employees, attorneys, trustees, insurers,
representatives, contractors, subsidiaries, related organizations and affiliates
(collectively, the "Released Parties"), jointly and individually, from any and
all claims, demands, debts, causes of action, claims for relief, and damages, of
whatever kind or nature, known or unknown, developed or undeveloped, which
Employee had, now has or may hereinafter have from the beginning of the world to
the date of this Agreement, including, without limitation, all claims and all
rights which the Employee may have under Title VII of the Civil Rights Act of
1964; the Equal Employment Opportunity Act of 1972; the Civil Rights Act of
1991; the Age Discrimination and Employment Act of 1967; the Employee Retirement
Security Act 42 U.S.C. ss. 1981; the Older Workers' Benefit Protection Act; the
Americans with Disabilities Act; the Family Medical Leave Act of 1993; the Equal
Pay Act; the Fair Labor Standards Act; the Broward County Equal Opportunity
Ordinance, any federal or state whistleblower acts and any and all other
federal, state and local laws and statutes which regulate employment; and the
laws of contracts, tort and other subjects. The Employee agrees that the
forgoing enumeration of claims released is illustrative, and the claims hereby
released are in no way limited by the above recitation of specific claims, it
being the intent of the Employee to fully and completely release all claims
whatsoever in any way relating to the Employee's employment with the Company and
to the termination of such employment.
5. RELEASED PARTIES AND NO ADMISSION OF LIABILITY. For purposes of
paragraph 4, "Releasors" shall mean, collectively, the spouse of the Employee
and the Employee's dependents, heirs, executors administrators and assigns, past
and present and each of them and their trustees, directors, officers, agents,
attorneys, insurers, employees, stockholders, representatives, successors,
assigns and all persons acting by, through, under or in connection with them,
past and present. The Employee further agrees that the definition of Released
Parties contained in Section 4 of this Agreement shall be broadly construed and
its expressly includes, without limitation, all current and former: officers,
directors, employees, shareholders, attorneys, trustees, insurers,
representatives and contractors of the Company, its subsidiaries and affiliates
entities, in addition to the other persons an entities referred to in Section 4
hereof. Execution of this Agreement and payment of the payments specified in
Section 3 of this Agreement does constitute an admission by any of the Released
Parties of any violation of any civil rights or other employment discrimination
statute, or any other legal statute, provision, regulation, ordinance, order or
action under common law. Rather, this Agreement expresses the intention of the
parties to resolve all issues and other claims related to or arising out of the
Employee's employment by the Company without the time and expense of litigation.
6. NO COMPLAINTS OR LITIGATION. The Employee represents and warrants
that he has not filed against the Company or any of its subsidiaries, affiliates
or any Released Parties, any complaints, charges or law suits arising out of his
employment by the Company, or any other matter arising on or prior to the date
hereof.
7. GOVERNING LAW. The law of the State of Florida shall govern the
validity of this Agreement, the construction of its terms and the interpretation
of the rights and duties of the parties. This Agreement constitutes the entire
agreement and understanding between the Employee and the Company regarding the
Employee's resignation from employment with the Company. This Agreement totally
replaces and supersedes any and all prior agreements, arrangements,
representations and understandings between the Employee and the Company,
including but not limited to the Employment Agreement and agreements in which
the Employee was granted options to purchase the Company's common stock, except
for certain sections of the Employment Agreement which have been incorporated
herein by reference. Any agreement to amend or modify the terms and conditions
of this Agreement may be specifically enforced in judicial proceedings and may
be used as evidence in a subsequent proceeding in which a breach is alleged.
Headings are for convenience only and should not be used in interpreting this
Agreement.
8. NON DISPARAGING REMARKS. The Employee agrees that he will not
directly or indirectly, individually or in concert with others for a period of
five years from the date of this Agreement, (i) disparage, interfere with or
attempt to interfere with the Company's reputation, goodwill, services, business
and/or the Company's stockholders, directors, officers, employees, agents,
representatives and any affiliates or (2) engage in any conduct, take any
actions or make any statements (oral or written) to the public, future
employers, customers, vendors, the investment community, the media, current,
former or future Company employees, or any other third party whatsoever that is
calculated to have, or reasonably likely or possibly having, the effect of
undermining, disparaging or otherwise reflecting negatively or could reasonably
be considered to undermine, disparage or reflect negatively, on the Company, it
reputation, goodwill, services, business and/or stockholders, directors,
officers, employees, agents, representatives and its affiliates.
9. KNOWING AND VOLUNTARY SETTLEMENT.
9.1 IN EXECUTING THIS AGREEMENT, THE EMPLOYEE HEREBY REPRESENTS THAT HE
HAS BEEN AFFORDED A REASONABLE OPPORTUNITY TO CONSIDER THIS AGREEMENT; THAT HE
HAS COMPLETELY AND CAREFULLY READ THIS AGREEMENT; THAT HE HAS BEEN ADVISED BY
THE COMPANY TO CONSULT WITH AN ATTORNEY OF HIS OWN CHOICE PRIOR TO EXECUTING
THIS AGREEMENT, AND RELIED ON THE LEGAL ADVICE OF HIS ATTORNEY; THAT HE HAD THE
OPPORTUNITY TO HAVE AN ATTORNEY EXPLAIN TO HIM THE TERMS OF THIS AGREEMENT; THAT
HE KNOWS AND UNDERSTANDS THE CONTENTS OF THIS AGREEMENT; THAT THE TERMS OF THIS
AGREEMENT ARE TOTALLY SATISFACTORY TO AND FULLY UNDERSTOODAND VOLUNTARILY
ACCEPTED BY HIM.
10. FUTURE COOPERATION. The Employee agrees to cooperate fully with the
Company in connection with any matter or event relating to his employment or
events that occurred during his employment, including, without limitation, in
the defense or prosecution of any claims or actions not in existence or which
may be brought or threatened in the future against the Company, including but
not limited to any claims or actions against its officers, directors or
employees. The Employee's cooperation in connection with such matters, actions
and claims shall include, without limitation, being available, after reasonable
notice to meet with the Company regarding matters in which the Employee was
involved; to prepare for any proceeding (including without limitation,
depositions, consultations, discover or trial); to provide affidavits; to assist
with any audits or reviews of the Company's financial statements; to assist with
any legal proceeding or other injury and to act as a witness in connection with
any litigation or other legal proceeding affecting the Company. The Employee
shall be reimbursed for any reasonable out-of pocket expenses incurred in
connection with providing such cooperation under this Section 10. The Employee
further agrees that should he be contacted (directly or indirectly) by any
person or entity adverse to the Company, the Employee shall promptly notify an
executive officer of the Company of any such requests in writing.
11. EFFECT OF SETTLEMENT, INTERPRETATION AND SCHEDULES. The Company and
Employee intend this Agreement to be legally binding upon and inure to the
benefit of each of them and their respective heirs, administrators, executors,
successors and assigns. The language of this Agreement shall be construed as a
whole, according to its fair meaning and intent and not strictly for or against
any party hereto, regardless of who drafted or was principally responsible for
drafting this Agreement. The recitals contained at the beginning of this
Agreement are expressly made a part of this agreement. All Schedules identified
in this Agreement (Schedule 2.3, Schedule 3.1 and Schedule 6) are incorporated
herein by reference and made a part hereof.
12. ARBITRATION. Any dispute or controversy between the Company and the
Employee, whether arising out of or relating to this Agreement, the breach of
this Agreement, or otherwise, shall be settled by arbitration in Florida
administered by the American Arbitration Association, with any such dispute or
controversy arising under this Agreement being so administered in accordance
with its Commercial Rules then in effect, and judgment on the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall have the authority to award any remedy or relief that a court
of competent jurisdiction could order or grant, including, without, limitation,
the issuance of an injunction. However, either party may, without inconsistency
with this arbitration provision, apply to any court having jurisdiction over
such dispute or controversy and seek interim provisional, injunctive or other
equitable relief until the arbitration award is rendered or the controversy is
otherwise resolved. Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, or to obtain interim
relief, neither a party nor an arbitrator may disclose the existence, content or
results of any arbitration hereunder without the prior written consent of the
Company. The parties agree that any arbitration proceedings shall be held in
Broward County, Florida, unless mutually agreed by both parties in writing.
13. ENFORCEMENT.
13.1 The Employee agrees that the Company, its subsidiaries and
affiliated parties, would be damages irreparably in the event that any provision
of this Agreement were not performed in accordance with its terms or were
otherwise breached and that money damages would be an inadequate remedy for any
such nonperformance or breach. Accordingly, the Company and its successors and
permitted assigns shall be entitled, in addition to other rights and remedies
existing in their favor, to an injunction or injunctions to prevent any breach
or threatened breach of any of such provisions and to enforce such provisions
specifically (without posting a bond or other security). The Employee agrees
that he will submit himself to the personal jurisdiction of the courts of the
State of Florida in Broward County or any other applicable court in any action
by the Company to enforce an arbitration award against him or to obtain interim
injunctive or other relief pending an arbitration decision.
13.2 The Employee acknowledges and agrees that in the event that he
breaches any of the provisions of this Agreement or has made any false
representations to the Company, the Company will be (i) entitled to apply for
and receive an injunction to restrain any violation of this Agreement, (ii) seek
return of any and all compensation paid to the Employee pursuant to Section 3 of
this Agreement and (iii) the Employee will be obligated to pay the Company its
costs and expenses in obtaining such injunction and/of enforcing this Agreement
(including, but not limited to courts costs, expenses and reasonable legal fees)
and the foregoing shall in affect the validity of this Agreement and such relief
does not constitute in any way a penalty or forfeiture.
14. SEVERABILITY AND WAIVER OF JURY TRAIL. Should any provision of this
Agreement be declared illegal or unenforceable by any court of competent
jurisdiction and cannot be modified to be enforceable, including the general
release language, such provision shall immediately become null and void, leaving
the remainder of the Agreement in full force and effect. However, if any portion
of the general release language is ruled to be unenforceable for any reason,
Employee shall return the consideration paid to her pursuant to Section 3 of
this Agreement to the Company. The Company and the Employee each knowingly,
intentionally, and irrevocably waive any and all rights to a jury trial for any
litigation or legal proceeding in any way relating to or arising out of this
Agreement or the Employment Agreement.
IN WITNESS WHEREOF, the aforesaid parties have hereunto set their hands
and seals as of the day below written.
/s/ Xxxx Xxxx
-------------
Xxxx Xxxx
Executed on April 12, 2004
The Singing Machine Company, Inc.
/s/ Yi Xxxx Xxxx
----------------
Yi Xxxx Xxxx
Chief Operating Officer
Executed on April 12, 2004
SCHEDULE 3.1
XXXX XXXX
XXXXXXXXX CALCULATIONS
Moving
Payroll Week End Pay Date Payroll Expense** Severance Cobra*
4/10/2004 4/15/2004 4,615.39
4/24/2004 4/29/2004 5,500.00 350.00
5/8/2004 5/13/2004 5,500.00
5/22/2004 5/27/2004 4,875.00 350.00
6/5/2004 6/10/2004 4,875.00
6/19/2004 6/24/2004 4,875.00 350.00
7/3/2004 7/8/2004 4,875.00
7/17/2004 7/22/2004 4,875.00
7/31/2004 8/5/2004 4,875.00
8/14/2004 8/19/2004 4,875.00
8/28/2004 9/2/2004 4,875.00
4,615.39 11,000.00 39,000.00 1,050.00
* Cobra Payments must be received by the 25th of the month prior to due date.
These are non-taxable distributions. Coverage is for individual.
** Moving Expenses are non-taxable distributions.
Severence
4/16/2004 Start Date
5 mos @ 30
9/13/2004 days
